Australias spending habits infographic

Investment requires that we delay some immediate gratification and save for the future. It means forgoing spending now for a potentially more comfortable retirement.

One of the most basic tenets of financial literacy is to make a budget. Start by analyzing what you spend your money on.

You may be surprised at your incidental and or unnecessary spending. Making your own lunch and not buying it at $10 a day for 48 weeks of the year equates to nearly $2500!

Saving has to be a deliberate decision – a plan that you make ahead of the dollars appearing in the account. For some people it is even necessary to have a portion of your wage or salary automatically credited to a savings account so the temptation to spend is reduced.

It’s about prioritizing and “first things first!”

The story goes that a professor asked his class if a jar is full when it has large rocks in it, to which the class enthusiastically and confidently agree it is.But then she fills the gaps with sand and asks again, “Is it full?”

While it appears to be full and the class thinks they have come to the end of the demonstration, she says “No” and proceeds to pour in a container of water and says, “Now, it’s full!”

It’s about “choosing your rocks” carefully!

Deal with the big issues first, earning potential, organization, discipline and goals, large and small. The rest is the ‘sand’ and ‘water’ – you can enjoy all the little things but if you “fail to plan, you plan to fail”.

Most people however, ‘live to their income’. In other words if they have to live on $75K a year they do, but if they get an increase to say $90K, most don’t maintain the same standard of living and save the additional income, typically their spending rises in line with their income!

Often they wonder why they aren’t better off?!

It’s true that some people may not make great savers but they are great payers – give them a commitment and they will faithfully pay it and work towards ownership. If financial discipline does not come easily, creating an investment strategy may just help to achieve it.

At a time of record low interest rates, the difference between having an investment property and not, may be as easy as not eating take away a few times a week or maybe smashing your own avacado!!

To work out where your money is going try ASIC’s Budget Planner

Then you can check out advice on simple ways to save money:

Don’t leave your future to chance, make decisions today that will enhance and empower your future. You can rely on fortune cookies, or you can make a plan and stick to it!