wealth is relative how do you measure up

Written by The ReReport

AUSSIES have never been richer than today, the numbers tell us.We each have an average $410,000 of net worth — which is assets minus debts — and that has grown by $100,000 in the past five years, according to the Australian Bureau of Statistics.Our superannuation nest eggs are at record highs, and we are retiring with average super balances above $200,000. We have more consumer luxuries, technological gadgets and travel experiences than ever before.MORE: How to survive the next GFCHowever, ask people if they feel wealthy today and many will say “no way”. Consumer confidence readings are solid but not great.There are a few key reasons why we don’t feel wealthy, and a simple solution.1. WEALTH IS SHOVED IN OUR FACESEveryone today is showered with images — especially on social media — of seemingly rich people doing expensive things.Nobody posts pictures of themselves working two jobs so they could afford that overseas holiday, and advertisers are always going to try to appeal to our desires.It all creates a false image that everyone else is doing better than us.2. WE LIVE ON THE EDGEMany Australians have a knack for spending every cent they earn, and often a little more — which ends up in a growing pile of consumer debt.It’s the old Keeping up with the Joneses syndrome, but if the Joneses’ luxurious lifestyle is funded by a flimsy loan structure, you will follow them into a financial black hole.This feeling of constantly struggling to pay the bills does not give people confidence about their own wealth.media_cameraBeware of people splashing their wealth in your face. It may be a facade.3. NUMBERS TRICK USComparing our own financial situation with averages is unfair, because average wealth is always higher than what the vast majority of people have. The median figure — which is the middle person out of all people measured — is more accurate.For example, the average super balance for someone aged 60-64 is $214,000, but the median balance is just $68,000 — which means half of all people in that age group have less than $68,000 in super.4. WE HAVE NO IDEA WHAT WE’RE WORTHIt’s hard to feel wealthy if you don’t know your own net worth. In many cases you may be surprised about just how much wealth you have.A great exercise is to write down all your debts and all your assets — including home, contents, cars, superannuation and any investments.Hopefully the net number — assets less debt — is positive rather than negative and gives you a good starting point to create a plan about growing it, month by month, over the coming years and decades.THE SOLUTION?Apart from having written goals and a plan, the best way to feel richer is to think about your wealth relative to others.If family and friends seem richer, look wider — there’s always plenty of Australians doing it tougher, and almost 80 per cent of us retire on full or part age pensions.If that doesn’t work, think global. If the total value of your assets, super and possessions is $135,000 or more, you are among the richest 9 per cent of people on the planet.@keanemoneyOriginally published as Why we don”™t feel wealthy

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