Information released this week from the IPA shows the change in cost of goods and services compared to wages growth. Over the past 20 years from 1997 to 2017 wages have increase 90% while the cost of services such as housing, electricity, rates, insurance, child care and education have more than double and some tripled the growth or wages. On the bright side other items such as food, clothing, household appliances, motor vehicles and electrical equipment have gotten cheaper or incurred cost increases less than wages. Overall inflation has grown slower the then wages.
We are now in a two stage economy, if you have grown up kids, own your home with solar panels you have most likely been able to avoid most of the pain. For families however it is a different story, sure you can buy consumables at a far cheaper percentage of income but major expenses such as buying a home, child care, kids’ education, rates, insurance and electricity will clean out that saving account. Keep in mind that we also have very low interest rates at present, an improvement in the economy could see this change.
For many young families the cost of living has out grown wages, this will over time reduce the amount or money which can be allocated to savings. You need to start planning long term and make small sacrifices now that will allow you to retire comfortably or you can work until your 80 year old, your choice!
Getting ahead financially is a combination of saving money, reducing tax, return on investments and time. It is now more important than ever to get these four core principal’s right. Time is more important than ever, the cost of living is not going to reduce and I doubt wages will catch up to the already large increases in service expenses.
Talk to your financial adviser now, start early! If you put away a small amount each pay day in superannuation your future self with thank you. Extra contributions of $50 per week into super over your working life of 30 years could add as much as $250,000 to your retirement nest egg.
The secret is to start early!
Come in and have a free chat with our advisers at Grow Your Wealth and build a better retirement. Call 07 4771 4577 or email firstname.lastname@example.org to book a time.