In kicking off this blog around Wealth Creation for Generation X, I’ll introduce some key fundamentals in three parts. Whilst initially this will merely scratch the surface, this Wealth Creation for Generation X blog is aimed at delving a lot deeper into these wealth creation fundamentals over time and provide you with valuable and tangible ideas to help you Fuel your Family’s Future.
In “Part 1”, I’d like to share with you arguably the most important realisation for Generation X (that potentially our parents generation didn’t need to consider)…this idea really drives the need to take charge of your financial future.
With continued financial uncertainty with the follow up to the budget and proposed changes to current superannuation rules I think it’s now more important than ever to build wealth outside of superannuation in addition to building wealth inside of superannuation.
Whilst I’m a big believer in superannuation and think it should be part of everyone’s overall financial strategy, it should only be one part. That’s because I truly believe that the age at which we can all access superannuation is going to dramatically increase. Right now for Generation X the superannuation accessibility age is age 60. But for anyone under age 45, I firmly believe that we won’t be able to access our super until we are age 70, or even 75.
Now if you want to be in a position to retire at age 60 that presents a bit of a problem. The reason that presents a bit of a problem is that studies have shown that around 81% of people spend everything that they earn. And 9% of people spend more than they earn through credit cards and personal loans.
A recent study by Suncorp found that the average Australian couple is saving $427 per month. However if only 10% of couples are saving anything, the average for the other 90% is zero…or less than zero…while the average for the top 10% of savers is a lot higher than $427 per month. If 90% of people are not saving anything, it makes it exceptionally difficult for most people to build wealth outside of superannuation.
If you are not currently part of this 10%, then I strongly encourage you to resolve to do whatever it takes to join this group and be part of the minority of Generation X that save money. This is the key to creating your financial future. It all comes back to (surplus) cash flow. In “Part 2” we’ll explore what I believe is the most powerful way to start “paying yourself first”.
Matthew Morrison is the Director of Wealth Advisory at The Practice, a Personal Wealth & Business Advisory firm based in Parkville, Melbourne. Matt along with The Practice team are committed to and passionate about developing and implementing financial strategies to enable clients to Fuel their Family’s Future.
Matt and The Practice team can be contacted via http://www.thepractice.com.au or (03) 8888 4000.