You’ve got to love the Wiggles. Despite the fact that their audience can’t even wipe their own backside, they still manage to top the Aussie entertainers earnings charts, raking in an estimated $50 million a year. Hot potato, hot potato.
We can all learn some money skills from the skivvied ones but for those of us who have graduated beyond Dorothy the Dinosaur, here’s some money advice no matter what’s playing on your iPod.
20s: Australian Idol
You have no real idea what you’re doing. Performing degrading acts for the amusement of your baby boomer bosses and having them rate your performance seems like a fair cop at this stage of your life. It’s only later that you realise that a big corporation is exploiting you.
The first 10 years out of high school can set you up or stuff you up.
Although your financial plan when you are in your 20s may consist of winning Australian Idol, the odds are more likely that you’ll end up playing Shannon Noll covers at the local RSL.
Take a leaf out of Paul Kelly’s playbook and understand that from little things big things grow, which applies equally for savings as it does for credit card debt.
Open a high-yielding online savings account and get your payroll officer to direct 10 per cent of your pay into it. Then scramble the password. Developing a savings strategy at this time in your life is perhaps the best financial move you’ll ever make.
Keep on the gravy train as long as Kevin keeps serving it up – one worth checking out is the Government’s co-contribution scheme for super – which should be renamed ‘Free money from the Federal Government’ because that’s essentially the deal.
If you’re eligible to make a personal contribution to your super, the Government will stump up $1.50 for every $1 you contribute up to a maximum of $1500 a year (if you chip in $1000). This one strategy can add up to $20,000 to your end balance.
Big hit: Learning about how money works in your 20s can make you millions.
You were never going to sell out, but before long, boozy nights in dark hotels are replaced with skim milk lattes and the bright lights of Ikea on a Sunday morning. This is no time for melancholy, instead switch the dial to Triple M – marriage, mortgage, and midgets. It’s time to set up (and feather) your nest.
The biggest danger for thirty-somethings is over-extending themselves. I’ve often thought that the reason property people bang on about those same three words – location, location, location – is that they couldn’t think of another two.
For the first homebuyer location is a secondary consideration to the fundamental factor of being safely able to afford your home.
Unless you’re queer eye for a straight guy, chances are that sooner or later two incomes will become one and it’ll have to feed three. Murphy’s law suggests that this will be the same time that the car breaks down and interest rates begin to rise.
Trust me on this one. The inner-city blue ribbon suburbs can wait. Work hard to pay down your mortgage as quickly as you can.
Unless you have a wife of steel, steer clear of a line of credit – it invariably ends up in tears. It’s often a better move to get an offset account and park any spare cash there.
Big hit: Get the mortgage under control, eliminate personal debt, and encourage both sets of doting grandparents to start up an education investment bond (just not with the Australian Scholarships Group) for junior. Oh, and a note from some bloke called Meatloaf – get a prenuptial agreement.
Forty may be the next 30, (well, according to all the 39-year-olds anyway). It’s time to face facts – if you know all the words to Like A Virgin you most certainly aren’t. Resist the temptation to throw on your cone-shaped bra one last time – it will only scare the neighbours and embarrass your now school-aged children. The major danger in your 40s is being an overly material boy or girl in this material world.
With the mortgage under control you’re probably eyeing off a bigger McMansion to trade up to. The aim of the game in personal finance is to minimise the debt you can’t get the taxman to help you out with (eg. a mortgage), while maximising the loans they will help you out on conservative investment loans for shares and property.
Big hit: You really don’t need a four-wheel-drive – suburban tractors are so 2004. If you’ve got enough cash, spend a couple of grand on a good fee-for-service financial planner. Setting up an investment strategy could add a few zeros to your end balance.
You’re not cool anymore. You haven’t been for almost 20 years. With each passing year you loosen another belt notch, and that ’80s-inspired ponytail isn’t fooling anyone. You are in danger of buying a red BMW convertible.
This is sometimes the age where people start playing catch-up, or start-over (hence the message to the 30-year-old). In order to make up for lost time, men (and it is mainly men) are attracted to all sorts of silly ideas like trading Contracts For Difference, going to a property investment seminar, or dating younger women. They sound exciting – just make sure you have the ticker. Most will leave you broke.
Big hit: The rough rule of thumb is you’ll need $100,000 in assets for every $8000 of income each year you want in retirement. Seek a professional to find out how to get there in one piece.
60s: Rolling Stones
You never thought you would make it to 30, which is why mentally you don’t feel any older than when you were at your prime (despite the overwhelming evidence in the mirror).
You’re still out there beating your own drums, but the kids don’t listen to you anymore. Instead you travel the world reliving your glory days.
Something strange happens to people when they retire (other than having dinner at 5pm and moving to Queensland).
Hitting the home stretch makes them more cautious about their investments.
Because there’s so much of it floating around, your retirement money is like a flame to millions of money management moths, many of whom will burn a hole in your pocket.
Of particular note are shonky reverse mortgages, and my personal favourite, the archaic sounding debenture bond. In light of the $8 billion that’s already tied up in these schemes, this week the Australian Securities and Investments Commission launched a guide to investing in unlisted, unrated debentures that ran to 20 pages. Barefoot will summarise it for you: Don’t.
Big hit: SKI (spend the kids inheritance)!
Tread your own path!