News & Commentary

Reality check: Can you really stretch your money? 28 Jul 10

You have probably heard the messages many times: save enough for retirement, pay off your mortgage before you retire, take income-protection insurance and so forth – the must-do list for our money seems endless.

Most of the things on money must-do lists are usually highly reasonable and responsible. But the question facing most of us is how to stretch our income far enough.

As George Mannes, a senior editor with Money Magazine in the US, writes in a column this week: “Problem is – for most of us – there doesn’t seem money enough to fully fund all of those purposes and put dinner on the table.”

And he adds: “Complicating matters are the legitimate everyday demands of everyday existence – your kid needs a computer, your parents need help with the bills, your car needs new tyres …” And then there are things you would like to do – Mannes gives a revamped kitchen as an example – but are hardly top priorities.

Mannes then set himself the task of speaking to financial planners about how to deal with too many demands and not enough money.

The findings from his research are hardly earth shattering: Keep paring the list of must-do things down to the barest minimum that are most important and can, in reality, be achieved. And then create a proper savings plan and budget to keep you on track.

Read his article.

The need for regular savings, budgeting and tightly controlling credit cards are among Smart Investing’s favourite subjects. Without a proper budget, for instance, those with even high incomes can struggle to meet even the most fundamental demands on their money.

ASIC always carries strong budgeting and credit-card advice. And increasingly, large super funds are providing straightforward financial tips for their members – that go much beyond saving for retirement through super.

Superannuation and practical financial tips are, of course, indelibly linked. The better a member’s control on spending, the more money the member may have to save for retirement.

* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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