News.com.au surveyed readers from the 29th of August about how they felt about their finances and the results of that survey were published today. 53,000 people participated in the self selected survey. Of those surveyed the general consensus was that no matter what we earn we're still struggling. Although this is just an anecdotal opinion supported by the comments on the latest News.com.au article this is because the more you earn the more you spend. If you have a lower income your rent is likely to be lower and you may forgo certain "luxuries" and "wants" that you'd buy if your income was much higher. It was suggested in the article that people with higher incomes tend to send their children to private school and spend more on accommodation and fancier cars (which really, depending on the year, you can get a luxury car for a similar price as a newer mainstream car.
I can support this claim. When I was at university I thought $30,000 would be a massive income (at the time I was working part time and earning about $300 a week or $15,000 a year. Fast forward a few years later and that's nothing. That wouldn't even cover my rent, well yes, it would cover my rent and my transport and leave about $20 for food, phone etc. Fortunately my income hasn't been that low in years. The point I'm making though is the more you earn the more you want. You adjust because your mentality changes and you start to think, "I can afford that".
Isn't the purpose of having a higher income to start getting ahead? How can you get ahead if you're spending more on items and services you don't need? It would seem to me that you can't.
News.com.au spoke to three people back in August.
One earned around $50,000 and spent $300 a week on rent.
Another earned $70,000 and spent $250 on rent and was saving for a house.
The third didn't provide information on their rent but said that they had a combined household income of $245,000 and struggled.
In the first case the problem is quite clear. The woman is spending too much on rent and needs to move somewhere cheaper, although if she's spending $300 on rent, that leaves about $500 (this is based on an assumed after tax income of $800 per week), so where is the money going? It seems to me she is living beyond her means.
The second is smart. He's got the right idea spending only $250 a week on his rent. He said he's saving for a house and putting away $1000 a month on good months.
I'd like to see the budget of the third one. If you're struggling on $245,000 as a family of four then you are doing something wrong. You should be able to put away $50,000 each year at least, and that would still give you the ability to live luxuriously.
The bottom line is that people are not struggling because of the cost of living, they're struggling because of poor financial decisions and if you really want to you can get ahead. You just have to be careful with where you spend your money.
I can support this claim. When I was at university I thought $30,000 would be a massive income (at the time I was working part time and earning about $300 a week or $15,000 a year. Fast forward a few years later and that's nothing. That wouldn't even cover my rent, well yes, it would cover my rent and my transport and leave about $20 for food, phone etc. Fortunately my income hasn't been that low in years. The point I'm making though is the more you earn the more you want. You adjust because your mentality changes and you start to think, "I can afford that".
Isn't the purpose of having a higher income to start getting ahead? How can you get ahead if you're spending more on items and services you don't need? It would seem to me that you can't.
News.com.au spoke to three people back in August.
One earned around $50,000 and spent $300 a week on rent.
Another earned $70,000 and spent $250 on rent and was saving for a house.
The third didn't provide information on their rent but said that they had a combined household income of $245,000 and struggled.
In the first case the problem is quite clear. The woman is spending too much on rent and needs to move somewhere cheaper, although if she's spending $300 on rent, that leaves about $500 (this is based on an assumed after tax income of $800 per week), so where is the money going? It seems to me she is living beyond her means.
The second is smart. He's got the right idea spending only $250 a week on his rent. He said he's saving for a house and putting away $1000 a month on good months.
I'd like to see the budget of the third one. If you're struggling on $245,000 as a family of four then you are doing something wrong. You should be able to put away $50,000 each year at least, and that would still give you the ability to live luxuriously.
The bottom line is that people are not struggling because of the cost of living, they're struggling because of poor financial decisions and if you really want to you can get ahead. You just have to be careful with where you spend your money.
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