MLC recently conducted a survey on the finances of Australian households and the results are fascinating. See article here – Many Australians living payday to payday.
Surprisingly, more than a quarter of all households earning between $150,000 and $200,000 and a fifth of all households earning more than $200,000 say they live pay-cheque to pay-cheque to afford their standard of living.
I’m conservative by nature, so the thought of living pay-cheque to pay-cheque scares me, but I can see how many might find themselves in this predicament. Here are a few things I’d consider on this topic.
- Complete a detailed budget to determine where you are spending your money. It might take a few hours to do this properly but it’s worth it. Take control over your finances and don’t leave things to chance.
- Once you know where the money is going, audit your spending and trim back where possible.
- Implement a cash flow management strategy to control your expenses, and be smart with the surplus (should you reduce debt, or invest, or save?).
- Use technology and set up automatic bank transfers that fit in with your strategy and life. For example, if you’re saving for a holiday, set up a new “holiday” bank account and automatically transfer the required amount from each pay. Don’t allow yourself the ability to spend it first. It’s not rocket science but it’s effective.
- Review your cash flow management strategy quarterly. If it’s not working, tweak it.
At Access FP, we are able to offer comprehensive cash flow management advice. For more information on the services we offer in this area, check out the following link – Cashflow Management.
Contact us on 08 9381 6811 for a complimentary consultation. Ray is a CERTIFIED FINANCIAL PLANNER® and LIFE RISK SPECIALIST® and has a Bachelor’s of Commerce in Financial Planning (with distinction). He is a member of The Financial Planning Association of Australia. We are based in Perth, Western Australia and specialise in retirement planning, wealth accumulation and wealth protection (life and disability insurance).