Making money

Most of us are out and about making money. If we are not working or unable to work then we need to work out how we can make the most of the money we have. It is easy enough to spend money. It is wise though if we do not spend more than we make! Once June (the month) arrived my thoughts turned to our yearly budget.

Earlier in the week I prepared our 2017-18 budget. It did not take long as it is a habit that happens every year. All I need to do is examine our expenditure from the previous financial year and see where adjustments are to be made. For example, our electricity went down this past year when mostly I hear that people are paying more for electricity. Our electricity costs went down because we replaced a 250-litre hot water system with an instantaneous gas system.

I also adjusted my behaviour to get the most out of our solar system. Every evening our dishwasher would go on. I changed this to the early afternoon to use our solar and minimise the use of electricity. As we are retired and at home we can do this. If you are out of the home working and have solar it is best to put the dishwasher on just before you leave for work, not in the evening, unless you have battery storage. Our electricity bill is now half of what it used to be. Our gas bill is not high as we have natural gas and only heat our water.

There are other ways we can be kept busy making money, but it all starts and ends with a budget.

Making money at the supermarket

When grocery shopping we can all make money by:

  • Planning our meals
  • Writing a shopping list
  • Not shopping when we are hungry

Some people think that you should leave the kids at home when you shop. This might be okay on some occasions and when they are younger. Once they are older it is good to involve children in helping write the shopping list. They can also get involved in comparing the cost of items on the supermarket shelf. Supermarket shopping is also a great opportunity to teach children/grandchildren about money and budgeting.

Do you use cash or card when supermarket shopping? Earlier this year I experimented with shopping with a card. To keep within our budget, I kept the receipts to keep a record. Most fortnights we were spending more than our allocated amount for groceries. We went back to paying by cash and now at the end of each fortnight we have unspent money. What is the psychology behind looking in your “grocery” wallet to see how much cash you have left for the fortnight? When you use a card, it is as though your spending power has no limits. Therefore, you spend more. Paying with cash though gives the check-out operator a surprise as most people today shop with a card. Will we move to a completely cashless society? I don’t think so. Even though technology has taken over with e-books, computers and kindles, many of us still like the feel of a book in our hands. Books, like cash will remain popular. Yet I hear that some businesses are considering a “no cash” policy. Is this to reduce the risk of theft? The only problem with a “no cash” policy is when there are technical issues and/or the power goes off. Everything comes to a halt and no card transactions can take place. In this case, it looks like all the diners who are leaving to go home will have to leave an IOU.

Writing down ideas for this year’s budget

Making money by giving gifts

When we give a gift, we do not have to go shopping. It is possible to make gifts at home. We can do this through cooking, sewing, knitting, art and crafts. I am not good at doing this and it is an area I could improve on. On the odd occasion, I have been creative and given a gift that I made myself, it is very rewarding.

Buy a crock-pot

Crock-pots reduce cooking costs. You can also buy cheaper cuts of meat to make a delicious home-made meal. If you are out making money put the crock-pot on before you leave for work and when at home relax – dinner is ready!

Having a budget means I am on target with managing my money

Gaining momentum for making money

When you are saving money, you are making money. I like to make my money work and I do this by knowing where my money ends up. Hopefully, not always in someone else’s pocket! Making money matters and it matters more the less you have.

It is not easy to make money when we leave it in the custody of the bank. Interest is low and money grows slow. Making money with money is difficult these days. Many families and retiree’s find that they are dipping into their savings. Making money by reducing expenditure is the common-sense approach.

Making money does not happen if you earn less than you spend. When you are doing your budget for 2017-18 think about, as I do, what makes you happy? Are people happier without debt? I know that I am happier if I have no debt and no money worries. What about you?

There are things that money cannot buy, like love or friendship. If we have these, and a little bit of cash to go with it and the right attitude to “making money” then we will have a good life!

Letter to Malcolm

On February 17th, I wrote a post titled “People, Passion and Politics”. It mentioned a letter I wrote to the Prime Minister of Australia regarding the changes to the Age Pension assets test. At the time, I was waiting for a response. I received it the day before my birthday.  A happy birthday cheer from the Hon. Mr Malcolm Turnbull, MP! Though when I opened the letter it was not on the Prime Minister’s letterhead.

My letter had been referred to the Minister for Social Services, the Hon Christian Porter MP, as the matter was within his portfolio responsibilities. Then the letter was given to an A/g Branch Manager from the International and Means Test Policy Branch. I was not sure what A/g stood for and went to the internet for guidance. One meaning was “air to ground”. But that didn’t sound right. I went back to my first hunch of a new shortened version for “acting”, that is, doing someone else’s job while they are “acting” somewhere else or on leave.

I scanned through the letter looking for a response regarding the Prime Minister’s view on establishing an Age Pension Tribunal, like the Parliamentary Salaries Tribunal. No mention of this anywhere in the letter. There was other information, some of which I will share in this post.

The emphasis, once again, was on the age pension being a “safety net”.  The new terminology of “safety net” instead of “entitlement” is an outcome of The National Commission of Audit Report 2014, “Towards Responsible Government”.

If a person meets an asset test they are “entitled” to an age pension or part thereof. No sorry, not “entitled”, but eligible. Note: a synonym for “eligible” is “entitled”. All that is happening is a play with words.

The letter I received was both a lecture and a history lesson. The lecture began with telling me that the “Age Pension is funded by taxpayers, and targeted through the means test to those who need it most”. The writer of the letter obviously did not read my post of January 23rd titled “The Naked Retiree and Age Pension Entitlements”. This detailed the history of the National Welfare Fund, dating back to the 1940’s in Australia. The writer stated that “those most affected by the changes would only have to draw down around 1.8% of their assets to make up for the loss of their part pension”. Note: assets also include furniture, cars, boats, caravans, jewellery etc. These assets cannot be drawn down on!

Given the poor interest rate return on cash investments the age pensioner will soon be eroding their capital. I spoke to one retiree recently who has $600,000 invested in a term deposit account. For six months, they will receive 2.7% interest or $8,100 on their money. Due to the changes, they are over the threshold of $542,500 and their part-pension ceased as of 1 January, 2017. To maintain a comfortable lifestyle this person requires $43,372 a year. Even with $16,200 of interest yearly another $27,172 is needed annually. It is clear to me why there are some unhappy people who settled into retirement under the “old” social security rules. Eventually though, once this person draws down on their capital over time they will again qualify for a part-pension.

If we are not careful our money, it will just slip away – out of our wallet!

Ian Wallace from the Courier-Mail wrote an article on 2 January, 2017. He stated “I suspect that outbursts of the most vocal and perturbed objectors to the changes to the aged pension are all about greed not need. People do not like to talk about greed, but really how much money in retirement is enough? There is nothing wrong with enjoying an affordable level of living and lifestyle, but a sense of entitlement is creating the most demanding generation in Australia’s history.” More rhetoric about “entitlement”. Yet, that is how it was set up by the government! It appears retirees are a “greedy bunch”. What can they do now? Sorry kids, we are spending your inheritance.

It would have been okay and retirees could have kept the title of “greedy bunch” if they stopped living so long! This is the biggest problem. People are living longer and that was not anticipated by the “greedy politicians” who were unwise in their spending habits and decision-making. Now the Parliamentary Entitlements Act 1990 must be changed. This is because politician’s working entitlements to do their job is no longer an “entitlement” but a “work expense”. A change of words to make it more palatable and acceptable to the Australian public.

Another question I asked was about the “entitlements”, sorry “work expenses” of current and former Parliamentarians. The A/g Branch Manager suggested I may wish to raise this matter directly with Senator the Hon Mathias Cormann, Minister for Finance. In my days, when I was working for the State Government, we would refer the matter to the Minister on behalf of the constituent for a response! We live in changing times!

This is the world I live in, these are the permutations of the world, I and others must accept. We have no power to protest, except at the voting booth. It is no wonder that the major parties are worried about what the populist think of them. There is much discomfort due to the rise of Pauline Hanson’s One Nation Party. One Nation are not proposing to change the threshold for the assets test or the taper rate however they will increase the age pension for those on the lowest income and will oppose the family home be included in the assets test. That is a positive step forward.

Sometimes we need to take time out and contemplate the deeper issues of life!

The issues facing older Australians are only one matter. Everyone is dealing with rising energy costs, daily cost of living, housing affordable, increasing household debt, homelessness, health and education costs. Where is it all heading? In The Weekend Australian, March 4-5, 2017, there was an article titled “Turnbull reaches the Tipping Point”. In case you have just returned to Australia after 3 years in Mongolia, Turnbull is our Prime Minister, the Hon. Malcolm Turnbull (the person I wrote my letter to). Not only has Turnbull reached the Tipping Point, the Nation of Australia is at a Tipping Point economically – too much debt, too much deficit. Whatever you think of Pauline Hanson, maybe she is right, by saying if we don’t address the “real” issues we will become a third world country. At the very least, Australia could lose its AAA credit rating and then there would be a gradual decline into a depression.

I certainly hope a financial collapse can be avoided by clever management of the budget: federal, state and household. This weekend, through the Western Australian, State election, we will all be enlightened as to how people vote when the nation is at a tipping point. I will be closely watching the result.  This could well be the “compass” for the future direction of politics in the Australia.