Tuesday, 21 Feb 2017
Times are constantly changing and so are the requirements of the lifestyles we choose to live, yet it does still surprise me how their are an astounding number of people in their late 20s and early 30s who have no real savings or investments, and yet they’re living the high life but on a week-to-week basis. I’m not referring to low-income earners who are trying to raise a family and make ends meet, I’m talking about young singles and couples with no kids and hefty annual paychecks.
In a way we’re conditioned not to talk about money or what we’re worth. Some people fear these labels like millionaire but hey you should be proud of what you’ve achieved.
So I read about this great story about a couple who each came into their relationship with modest savings and worked hard to continue to grow that wealth little by little over the years.. and eventually one day they became millionaires, the day the balance of all their savings and investments tipped over.
So what did they do? They went to Vue De Monde in Melbourne for a 10 course degustation and matching wines to celebrate the milestone. They both agreed that while it was fun to celebrate in style, and they’d waited to spend $999 (each!) on a meal until they could actually afford it, they wouldn’t be going back there or anywhere like there in a hurry.
They would be much happier eating street food in Bali or Mexico than paying that kind of money on a single meal. Each to their own.
But the bigger picture here in 2017 is that one million dollars in investment wouldn’t necessarily get you that far because it’ll probably produce around $30,000 to $40,000 in annual income. Not bad, but a recent survey showed that 73% of todays generation are living on over $50,000 a year and many on significantly more so it’s certainly not retirement money these days.
We know our generation are having kids later, earning more and living at home longer; so logic would say there is a huge opportunity for for the current generation to be capitalizing on the years they’re spending earning income with the little financial commitments we have, but unfortunately it’s not the case. We simply don’t have the big picture in mind…
Most people don’t stop to think about what their ‘number’ is. What I’m referring to is your financial freedom number. The total value of your wealth that would mean you’d never have to work again or at least know you’ve got enough to survive on for the rest of your life.
What total investable wealth do you need to produce the income you require to live a reasonably comfortable lifestyle without necessarily having to work? Essentially, creating a passive income stream.
Times have changed. In many cases, we earn significantly more than our parents did at our age and we’re marrying and having kids much later if at all. Yet, many of us are squandering this opportunity to be stockpiling the extra income. Our discretionary spending is through the roof, appearing wealthy takes preference over actually being wealthy and as a result many haven’t even started regular savings let alone investing toward a ‘number’ that represents financial freedom to them.
It may take many, many years to achieve this number, and how much is really enough in the end? Working that number out and then doing everything you can to get there before you retired permanently is a struggle but with careful financial planning and savings, there’s no reason it’s not possible.
We’re excellent at living in the moment, following our passion and not settling for anything less than what we really want. We’re blessed as Australians, we’ve grown up in a time free of any real human challenges. We’ve always had a roof over our head, food on the table and a good education. We get to spend time thinking about how we can be better versions of ourselves, and how we can be truly happy. What we’re not very good at however, is looking to the future, particularly when it comes to our wealth.
We’re not getting any younger. It’s time to take responsibility for our financial futures and spend some time focusing on the bigger picture. Establish what that number is for you, where you are now, and start taking action toward achieving it.
Stop waiting for the pay rise, the business sale, or meeting a rich partner and own your financial destiny. The longer you leave starting the harder it is to catch up.
