Want to be smart? Halve your income!

“Plenty of people on low incomes are terrific at budgeting; they have to be!” – Fiona Guthrie, Executive Director of Financial Counselling Australia

Today (2nd September) marks the beginning of MoneySmart Week – a national initiative bringing together more than fifty organisations from the business, government and community sectors, with the aim of advancing the financial literacy of all Australians.

CFA member Financial Counselling Australia is delighted to support MoneySmart Week and encourages Australians to take advantage of the free information and online calculators available.

“MoneySmart week is for all of us – no matter what your income or asset position,” says Fiona Guthrie, Executive Director of Financial Counselling Australia.

FCA encourages all Australians to complete the Money Health Check available on the MoneySmart week website (www.moneysmartweek.org.au) and to use the results to make some changes to their financial situation. “The money health check will only take a few minutes to do, but is very comprehensive – it takes people through the setting of goals, setting a budget, managing debts, saving, insurance, superannuation and estate planning,” Ms Guthrie said. “Once you have answered all of the questions, you’ll receive an online report highlighting any gaps or areas of need. The report also includes links to a number of other online tools and calculators that can help you. It’s an excellent activity.”

“Since the 1980s there has been an explosion of financial products in the marketplace. While consumer choice is a good thing, it also increases the complexity of financial decision-making. It’s not surprising that many consumers simply aren’t sure how to achieve their financial goals,” said Ms Guthrie.

Many Australians, particularly those on above-average incomes, could benefit by trying to live on less for a month or two. “Generally – and it’s human nature – our expenses often increase in line with our income,” Ms Guthrie said. “Whether it’s buying more takeaway, more expensive clothes, toys for the kids or taking more holidays, we tend to spend what we earn, regardless of the amount! Many of us just don’t know where all of our money goes. Plenty of people on low incomes, though, are terrific at budgeting; they have to be.”

“In keeping with the goals of MoneySmart Week, we are encouraging all Australians who are on or above an average income to try living on less. Obviously pay your bills on time, but when it comes to everything else, try halving it. That might mean public transport instead of expensive car parking or home cooking instead of takeaway. There are dozens of ways to cut costs. You might be pleasantly surprised with what you can achieve.”

Improving financial literacy isn’t the answer for everyone though, and for some in our community, reducing costs isn’t an option. “Some people simply have insufficient income to survive; those on the Newstart allowance of just $35 a day for example,” Ms Guthrie said. “For people who are below the poverty line, financial literacy isn’t the answer to financial difficulty. We also need a concerted push towards ensuing access to safe and affordable financial products. We are confident that that will happen over time and increasing the financial literacy of all Australians, through MoneySmart Week, is an important step along that path.”

Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007.