Edwards - $0 To Rich: The Everyday Womans Guide to Getting Wealthy

Contents

First published 2008 by Wrightbooks

an imprint of John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Typeset in Warnock Pro 11.5/15.5 pt

Reprinted 2008

Tracey Edwards 2008

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Author: Edwards, Tracey.

Title: $0 to rich : the everyday womans guide to getting wealthy.

Publisher Camberwell, Vic.: John Wiley & Sons Australia, 2008.

ISBN: 9780731407330 (pbk.).

Notes: Includes index.

Subjects: WomenFinance, Personal.

Wealth.

Dewey number: 332.0240082

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Brad Maxwell

Cover image iStockphoto/Nathalie Beauvois

Disclaimer

The material in this publication is of the nature of general comment only, and neither purports nor intends to be advice. Readers should not act on the basis of any matter in this publication without considering (and if appropriate taking) professional advice with due regard to their own particular circumstances. The author and publisher expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and of the consequences of anything done or omitted to be done by any such person in reliance, whether in whole or in part, upon the whole or any part of the contents of this publication.

Introduction

Not long after my first book Shopping for Shares came out, I was interviewed by a journalist for an article about women and money. It was clear from her questions that the skew of her story would be that women were rubbish at budgeting, and couldnt go past a store without dumping the entire contents of their wallets at the cash register.

Now, I tried to put her straight I said that I thought that women were great with moneybut she persisted in trying to get me to say that we, the fairer sex, didnt have a clue about saving for a rainy day.

The interview got me thinking: are women really good with money, or was the journalist right, and we do struggle to get ahead financially? I started looking at my friends a little bit closer. Did they have no clue about money? Was Visa paying for their lavish lifestyles, instead of their highinterestbearing accounts? How many of us girls were sticking to a budget?

I found that nearly all the women I spoke to were good at money and budgeting, and, in fact, they were more likely to be responsible for the household expenses, balancing the finances and paying the bills than their partners. They were also more likely to have a little nest egg tucked away for those emergencies that we all run into now and then. However, when it came to investing for the future, they were a conservative bunch, preferring regular bank accounts to riskier things like shares and property.

Its not that they didnt want to get more involved in investingjust that there were more pressing decisions, like how to afford the kids school excursions, and whether or not to get the latest Mariah Carey perfume.

But its time to get real about our futures. This living in the moment attitude will almost certainly have an impact on how well live when were older. Take a look at the frightening superannuation statistics in the table below.

Average Superannuation Balances 200304

Source: Ross Clare, Are Retirement Savings on Track?, Association of Superannuation Funds of Australia (ASFA), June 2007.

At all ages, women have about half the money in their retirement accounts that men do! According to ASFAs research, over 60 per cent of women will need to go on the full pension when they retire, compared to only 40 per cent of men. Will you be able to survive on the pension? It isnt much moneyaround $270 a week for a single and $450 a week for a couple (at November 2007). And while the pension will have increased by the time you retire (always presuming it still exists, of course!), dont expect that it will stretch to all the little luxuries youre accustomed to.

Okay, enough of the scary stuff. I know youve heard it all before. I also know that retirement seems far away and most of us are just concerned with getting the mortgage payments made on time. But what if you could make a difference to your future? What if it was possible to become one of those women who are financially independent? Want to give it a try? What have you got to lose?

My aim with this book is to help you get rich, or at least get richer than you are right now. I cant promise Ill make you a millionaire, but if you follow the steps outlined in this book, I can at least get you a little bit closer to it. Hopefully, as we travel this journey together I can guide you towards reaching your financial goals. Think of this book as your very own financial coach on your bedside table, helping you every step of the way and holding your hand as you make savings and investment choices.

In the first section well try and discover what you really want out of life. Too often we get caught up in what we think we want just because its the latest thing or everyone else has one. But once you discover what you truly want, all the other stuff seems trivial and only gets in the way. This chapter will hopefully motivate you to start a savings plan and set up a budget.

Next well create a really simple, nofail budget that will give you control over your money now and in the future. Youll be able to see just where your money goes each month and start to take more control over it.

Then comes the fun part: making money! Ill help you reach $1000 by saving, then well learn about term deposits and head towards making $5000, and finally aim at making $10 000 using managed funds. Youll be working alongside our character Penny Saver, so you can see exactly how she does it. Well start Penny with an ordinary average wage and zero savings but as youll see, where Penny ends up financially is anything but ordinary!

If youre interested in shares and property, the fourth section is just for you. Ill give you all the tips and terms youll need to move towards that rich future through investing wisely, whether your goal is to buy your own property or have a whole investment portfolio.

In the last section, Ill cover the allimportant topic of keeping your money safe once youve got some, using insurance and a will. Its not enough to just get rich; the trick is to stay rich!

Now, are you ready to get richer?

About the author

Tracey Edwards is a savvy writer with a passion for making money. She gave up her boring nine-to-five office job after only five short years of investing in the stock market, starting from zero savings.

Author of the bestselling book Shopping for Shares: the everyday womans guide to profiting from the Australian stock market, she brings her skills as an investor to this, her second book, an easytofollow guide to help women fasttrack their financial success.

She has an arts/journalism degree from Queensland University and currently lives in Sydney with her family.