Secret to Success

The economics editor, Sydney Morning Herald, Ross Gittins, in his column entitled ‘Saving is the secret to sustained success’ says ‘a great middle-class virtue is the ability to delay gratification. We could spend all our money now, but wouldn’t we be better off if we saved some of it for the future?’

Ten years ago, the ANZ Bank and the Brotherhood of St. Laurence got together to design a program to encourage people on very low incomes to save money. The scheme requires people to agree to save up to $500 over 10 months. Upon achieving that, the ANZ Bank matches it, leaving them with up to $1,000 to spend on their own education or that of their children. It also involves four financial educational workshops covering Planning & Budgeting, Saving & Spending, Everyday Banking and Planning for the Future.

The program has already had more than 23,000 participants, 86 percent of whom were women. It now operates at 60 locations across all states, with more than 500 ANZ branches making referrals.

You may think that ending up with saving of as little as $1,000 doesn’t prove much, but it is really about helping people to acquire the savings habit. Eighty-seven percent of people who completed the program said that they continued saving the same amount or even more. In addition, most of them said that they now have increased self-esteem and confidence, are better able to deal with financial problems; have more control over their finances, are better equipped to deal with unexpected expenses and experience significantly less stress about the future.

The program has now been expanded to include several other charities. If you know someone on a low income, who could benefit from this scheme, ask them to contact the Brotherhood of St. Laurence, Smith Family, Benevolent Society, Berry Street Organisation or the ANZ Bank itself.

Time is Money – Spend it Wisely

The Economics Editor, Sydney Morning Herald, Ross Gittins, in his column entitled ‘If time is money, let’s spend it properly’ said: ‘the fact that most of us get money by exchanging it for our time makes time an economic resource.’ Time is also an economic resource in another sense. When we exchange time for money we use time as a means to an end. We have money to buy things that we hope will make us happy; but time is also an essential part of the end itself. We need time to enjoy the things we have bought with our money; however the catch is, the more time we spend earning money, the less time we have to enjoy it.

The way you choose to spend your time, and the experiences you accumulate over the years, quite literally constitutes your life. How can you maximise the happiness you derive from your limited and unknown quantity of time? The first principle is spend your time with the right people. The most satisfying thing you can do is spend time with your nearest and dearest. Ideally, allocate more of your time to being with them and enjoying those intimate conversations.

One way of effectively increasing your available time is to effectively buy yourself additional time by paying someone else to do the household chores that you don’t enjoy. The more discretionary time you can organise for yourself, the more you are likely to enjoy that time.

However, by spending time with people, you also give them the power to shape your life. This is the essence of the Law of Association, which says: People have a tendency to become, like the people that they closely associate with. Most experts agree that this law is better expressed as: In five years time, you’ll be the average of your five best friends. For instance, your income, your level of satisfaction and your general outlook on life is likely to be similar to theirs.

The Law of Association works for two reasons. Firstly, like-minded people are drawn together. Secondly, we tend to become like the people that we hang out with. These two forces make the Law of Association extremely powerful. This means that the people you spend time with, will gradually shape the person you will become – they can elevate you, or drag you down.

Walk in the Park

Ross Gittins, economics editor, Sydney Morning Herald, in his article entitled ‘A walk in the bush is good for the soul’ says that although cities promote creativity and productivity, they have a dark side – insufficient grass and trees.

Research published in 2013, found that people who live in urban areas with more green space tend to report greater well-being; in particular, less mental distress and higher general satisfaction than city dwellers, who do not have parks, gardens or other green space nearby.

Another study from Canada began by listing all the various benefits from contact with nature that other research had found: it can restore people’s ability to pay attention; improve concentration in children with attention-deficit hyperactivity disorder (ADHD); speed recovery from illness; reduce stress, anxiety and symptoms of depression.

The British psychologist, Dr Jeremy Dean, estimates that people now spend 25 percent less time in nature than they did just 20 years ago. Recreational time now often consists of surfing the internet, playing video games or watching movies. He suggests that something as simple as joining an outdoor walking group may not only improve our positive emotions but may also contribute a non-pharmacological approach to serious conditions like depression.

The Sydney-based psychologist and coach Sarah-Jayne McCormick says that the reason we find nature so relaxing is in-built: ‘Early human beings didn’t evolve in offices and concrete blocks, we evolved out in nature. So there’s something we find intrinsically soothing about it.’

To improve your overall well-being and general health aim to take a walk every day. You might say: How can I fit that it? In the morning before going to work; at lunch-time, or even after work in daylight saving periods.

Youth Need a Hand

Ross Gittins, economics editor for the Sydney Morning Herald and The Age, in his article entitled ‘Youth need a hand to beat generation gap’ says ‘we’ve come to expect that each generation will be better off than its parents with more income, better housing and better healthcare.’

However, he highlights a report by the Grattan Institute Think Tank The Wealth of Generations, which has found evidence to support the fear that today’s generation of youth might be the first generation to have lower standards of living than their parents at a similar age.

Wealth disparity

The report, by John Daley and Danielle Wood, found that over the past decade, older households captured most of the growth in the nation’s wealth. Despite the global financial crisis, households aged between 65 and 74 in 2011-12 were on average, $215,000 better off than households of that same age range were eight years earlier.

Those aged 55 to 64 were $173,000 richer and the average household in the 35 to 44 age group was $80,000 richer; but those aged 25 to 34 actually had less wealth than people of the same age group eight years earlier.

Various developments have conspired to bring this disparity about. Probably the biggest is what is happening to house prices and levels of home ownership. Except for the oldest of households, rates of home ownership have fallen over the past three decades. In 1981, more than 60 percent of 25 to 34 year-olds were home owners; 30 years later only 48 percent of people in that age group were owners. In fact, an increasing proportion of people born after 1970 will never get a foot on the property ladder.

Safe as houses?

For most people, wealth is essentially determined by the value of their home and superannuation; however, housing is no longer the guaranteed fast-track way to wealth that it used to be. Traditionally, housing created additional wealth; because, the value of houses increased dramatically, thus providing people with growing equity. Christopher Joye, an executive director of Yellow Brick Road Funds Management, says ‘for the last 20 years or so house prices grew by nearly 8 percent a year; however, over the four years ended December 2013, they have only grown by 2 percent per annum.’

The head of research at RP Data, Tim Lawless, says home owners who bought in the last few years will find it much harder to build up equity. If house prices only rise in line with inflation, or wages, there are no windfall gains and no incentive to get into the housing market early.

Your retirement

On the other hand, in retirement you will be earning less money than what you are now, so there probably won’t be enough to pay rent, or to make mortgage repayments. Having a fully paid-for home will make your retirement much more comfortable. My tip is: Try your hardest to get into the housing market sometime before you retire.

Treat Workers Well

In his Sydney Morning Herald column entitled ‘Treat workers well, business will prosper’, economics editor, Ross Gittins, quoted the visiting scholar at Sydney University’s Workplace Relations Centre, Geoff McGill: ‘The history of federal industrial relations legislation has been punctuated by swings in the IR pendulum across the political cycle.’ As you will realise from recent political history his statement is true. For instance, the Howard government’s Work Choices swung the pendulum in favour of employers, then the Labour government’s Fair Work swung it back towards the unions. Now big business, and its cheer squad in the national dailies, want the restored Coalition government to give the pendulum another shove back in the direction of the employers. He also said: ‘This is the way that the political game has always been played, but it is not the way it should be.’

He further said that if we want better industrial relations, leading to greater productivity improvement, the way to encourage it is to give people – employers and employees – a period of legislative stability, rather than more changes in the rules of the game.

Getting along with people – winning their regard, respect, support, trust and co-operation – works better than getting heavy and legalistic. Workers, just like managers, also want to be kept in the loop. Smart managers keep their staff well informed about a company’s performance and the challenges it faces and give early warnings – even to the union – about the need for nasties like redundancies etc.

Co-operation is engendered by treating people well, consulting them, giving them a degree of autonomy, rewarding loyalty and sharing the business proceeds fairly between shareholders, managers and staff. It is the substance of the employment relationship, not its legal form, which determines whether people are engaged and productive. Productive workplaces are not the outcome of legislation, but of the quality of leadership and culture at the workplace.

Does your workplace need a little help?

Studies have shown that happy, goal-orientated people, who feel that they have some control over their lives and finances make better workers. Their positivity rubs off onto co-workers and customers thus increasing sales and productivity. They also tend to be healthier, taking fewer sick days.

This means that my keynote presentation about happiness produces a win-win situation. Employees learn how to be happier and richer and companies gain more productive staff. For further information about having me speak at your next corporate training day, seminar or convention, please phone me, Eric Stanley, directly on 0408 247 179.