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The average Australian is kissing goodbye to a minimum of half a million dollars in retirement by simply living with and refusing to do anything about their greatest problem — their chaotic, totally unplanned approach to spending and saving.

In fact, I reckon the losses are closer to a million dollars but I don’t want to depress too many of my readers, particularly the optimists, who are considering ‘investing’ on the upcoming Melbourne Cup. The joke is that lots of Aussies go the punt each weekend hoping to be rich one day, when being well off could be as big a certainty as Makybe Diva when she raced, if only they committed to a smart money regime.

Many of us lately have got wise to the fact that our natural tendencies to eat too much, drink too much, sit around too much and spend too much explains why we’re overweight, unfit and desperately short of that wonderful folding stuff called cash.

Some smarties have given up on themselves as rescuers from this hopeless state and instead have relied on a diet coach (dietician), a fitness coach (personal trainer) and there’s even in this age of coaches — a money coach. Of course, you could call them a financial adviser or planner but money coach is so now.

It’s time for proof about my claim that most of us have or are squandering half a million dollars.

In my book Beating Debt and Increasing Wealth, I showed calculations that if a person aged 21 socked away $2000 a year for only nine years into a super fund, that averaged a 9% return, and then stopped after that, the money rolling over and over turns into a nest egg on retirement at age 65 of $579,468!

In contrast, if someone plays up partying until age 30 and then starts saving $2000 into super until retirement they only pocket $470,249. Clearly, there are big pay offs from getting into super as early as possible. Also, if you are not happy with your super nest egg and you are getting older, there are ways to turbo charge your superannuation.

By the way if the responsible young person keeps up the $2000 a year until 65 the result will top a million dollars.

So where do you lay your hands on a lazy $2000 a year? Well, by setting a goal to find it is a great start. Lots of us are kissing money goodbye by using expensive credit cards and home loans.

This week I went to the website to check out the highest and lowest interest rates. The lowest standard variable home loan rate of interest was 6.96 per cent. The lowest fixed rate for three years was 6.99 per cent and yet many Aussies are paying over 7.8 per cent.

By paying one per cent more than you need to on a $300,000 loan can cost you $3000 a year.

The best credit card rate was 8.99 per cent while the highest was 18.99 per cent. Department store cards can be even higher. Someone with $10,000 on a credit card could lose $1000 a year because of ignorance.

Being money smart during tougher times can actually mean reviewing all of your spending. I love this example to make my point.

A while ago I came across research that found by taking public transport and ditching the car you saved $4,000 a year. Changing to a cheaper rental apartment saved $1,500. Killing off restaurants gave you $2,000. Boycotting movies saved $500 and avoiding the corner store gave you $500.

No magazines nets you $200, no CDs gives you $300 while selecting cheaper clothing delivers a $600 benefit. Cheapen the holiday to save $500 and give up smokes to welcome back $1,000. Ease up on the booze for $1,000 in the bank and abstain from take away food to gain an extra $500. All up you could save $12,600.

But get this, this came from a book called In Your Interest by Peter Freeman written in 1992! Imagine what you could save now if you tried.

Published on: Thursday, November 02, 2006

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