New research reveals that 65% of Australians have worried about not knowing how much money they will need in the next decade, but only 25% have acted to find out the required amount.
The data has also revealed that 17% of Australians simply don't think about the issue at all, 21% are concerned but haven't done anything about it at all, and 37% have tried to learn but are still feeling clueless.
Interestingly, the state that seems to worry the most about their financial state in ten years' time is South Australia (71%), followed by New South Wales (70.5%) and Western Australia (63%). Males are also more likely to understand how much they will need compared to their female counterparts.
The fact that such a large amount of people are stressing about their lack of knowledge of exactly how much money they will need to maintain their lifestyle in the next decade – yet doing nothing about it – is shocking.
The research also showed us people's beliefs around their situation, which was so disheartening to see. A lot of the comments such as 'I know my super won't be enough, but there's not a lot I can do about it', simply aren't true.
It's clear that even though some people are trying to do the right thing by learning more, are failing through traditional means, so I'm hoping that my debut book The Breakfast Club for 40-Somethings, which educates through a fable-like story about friends, is able to offer those people a different and more entertaining solution to improving their financial situation.
To help you better prepare for your future financially, here are a few of my top-line expert tips:
Prioritise making changes. How many times have you said "later" when it comes to doing something about money? Unfortunately, the longer you leave it, the more likely you are to be in real trouble and the less time you will have to get yourself out of it. So start making changes to your money habits today.
Pay yourself first – every pay check! Putting a percentage of your pay into a separate account on the same day you get paid is a great way to improve your ability to save money. Make the percentage a realistic amount and stick to it, regardless of life pressures that crop up. This is money that is not available to you, and becomes your financial safety net for the future.
Consolidate your current debt. If you have more than one credit card or personal loan, roll them into one. By doing this you will reduce the pressure of paying different payments over a month, and just find the money to pay one. You may also be able to access a cheaper rate doing this. Some credit card companies offer 12-month interest free periods to roll over balances, or some banks may give you a personal loan to cover it.
Cut costs wherever possible. Taking steps to cut down your costs now, add up significantly over time. These don't have to be huge changes, it can be as simply as putting your utilities on direct debit and ask for the corresponding discount (which most companies give), and help you put extra money into paying off your current debt, or into your savings account.
Start a side-hustle. In today's society, there are more ways than ever to earn extra money. Ask yourself, can you ride share to save petrol money, sell things on gumtree, drive Uber, or rent out an extra room on AirnBnB? Anything you can do to bring home extra money now, will continue to help you long into the future.
It may seem easier to continue living your current lifestyle and worry about how much money you will need to maintain it in the future, but I can assure you it's not. By taking small steps today, there is no reason you can't keep enjoying a similar standard of life, with the assurance of knowing you'll be able to secure a comfortable standard in your twilight years.
Purchase your copy The Breakfast Club for 40-Somethings here. The book is published by Wiley and is available in all major bookstores, including Big W, now. RRP $25.95. For more information visit www.vanessastoykov.com
Question: Are you surprised that 65% of Australians stress about money but do nothing about it?
Vanessa Stoykov: Not at all. Many Australians have very low financial literacy, and this comes down to what you don't understand, you shy away from. People don't like to admit that they don't know something, in particular when it comes to money, and so they bury their hand in the sand and refuse to do anything about it. Money issues cause immense stress. If you can't pay for your life or are struggling in any way with money, that's very stressful, so this statistic doesn't surprise me at all.
Question: How can we financially educate ourselves for the next decade?
Vanessa Stoykov: Firstly, have a look at what you earn and your expenses and then calculate the gap - that's the amount that you need to be saving.
Secondly, have a look at how much debt you're in and get out of it! A scary recent statistic revealed that 1 in 6 Australians are in credit card debt that they won't be able to get out of in their lifetime. That's terrifying. Look carefully at your credit card debt and set up a way to get out of it. Now.
Thirdly, look at your Super. 9.5% just isn't enough. Work out a way to get it up to 12% and then 15%. You won't notice that money coming out of your salary now but you sure will notice it in 25 years when you retire!
Question: What inspired you to write The Breakfast Club for 40-Somethings?
Vanessa Stoykov: I have a saying, 'Finance is boring, but money is sexy'. I want to make talking about finance sexy and my book has all of those 'sexy' elements; romance, jealousy – all of the human emotions. I felt this was the easiest and best way to get my important financial message across.
Question: What does The Breakfast Club for 40-Somethings teach readers?
Vanessa Stoykov: My book teaches people that the money decisions they make today, in their 30s, 40s and 50s will affect them in their 60s, 70s and 80s. I want to teach people to understand the long term implications that their spending will have on the rest of their lives. People don't like to accept that they can't afford to pay a certain amount of rent or send their kids to an expensive school. They want to treat themselves and enjoy life. My book shows how important it is to be real about what you can and can't afford and not to go over that.
Question: Can you share some examples of a side hustle?
Vanessa Stoykov: The obvious ones are Uber, Air B and B and Airtasker – the ones where companies have already set up the infrastructure and you can easily jump online and set up an account and get start making money. These are great as you don't have to set up your own business, it comes to you. I think the best thing to do is ask yourself 'What am I good at? and how can I turn it into money?' and that there should be the basis of your side hustle.
Interview by Brooke Hunter