Remember the days when being a millionaire actually meant being rich and people wanted to a millionaire to declare their financial independence when they attain that mark on the personal wealth? Gone those days, while it’s still sized sum but A$1 million is no longer life changing nor figure that ensures any financial security or independence. Especially if you live in an expensive city like Sydney or Melbourne, it won’t even get you cover with a decent home.
So what is the magic number that distinguishes the hardworking families of Australia’s middle class from the truly wealthy?
What is the research says the new magic number makes you rich?
A study by comparison site Finder says the magic number is A$5.3m. According to them as an Australian to be qualified to be “rich” that is the amount you would need to have under your belt as your personal wealth. That number actually represents the little more than seven times the national average household wealth, which is around A$740,000. Key notes there is, most of that amount is actually tied up in assets such as property as personal wealth, rather than cash on hand.
Interestingly men and women also have a difference in view in there. Men need at least A$5.9m in the bank to feel rich while women happy with the average of A$4.8m – reviled by a survey of 2005 people around the town.
Finder’s money exerts Bessie Hassan said the idea of wealth had shifted dramatically as inflation and the rising cost of living eroded the old definition of being rich. “Gone are the days where being a millionaire was the benchmark of wealth. Now, you need to be a multi-millionaire to be considered rich in Australia, and this is just in savings alone,” Hassan said.
“Once you account for mortgage repayments or rent, household bills, travel, and the cost of having a family, there’s not a whole lot left over in savings. Even if you earn a six-figure income you still will be clutching at straws.”.
Where is all the money going?
Childcare and education were in the top of the list of costs faced by Australian families, she said, which means that those with a high earning capacity “may still struggle financially”, noting that the perception of personal wealth was “relative”.
While A$5.4 million is the price tag on some luxury homes, it can stretch to cover a wide range of expenses – depending on how lofty one’s tastes are.
“For many people across Australia, A$5 million is an inconceivable sum. Saving that sort of money would be comparable to winning the lotto,” Hassan said.
“For the average Australian earning an A$79,721 salary and saving half their net income, it would take 60 years and 5 months to have A$5.3 million saved in the bank.”
She advised those struggling with living costs to draw up a household budget, asking for discounts on utility bills and negotiation a higher interest rate on savings with the banks.
What A$5.4 Million buys you
Not much really, nothing really flashy if you look at it:
- Three bedrooms decent house in Woollahra: A$2.8 million
- Private schooling for three children from K-12: A$1 million
- Weekend Hideaway in Bowral: A$845,500
- BMW 325: A$80,000
- Porsche Cayenne A$160,000
- 50-foot average cruising yacht: A$520,000
Having said that it’s still a decent life and it is not that hard in the current economy to attain that level personal wealth. I have few article on ‘how to become a millionaire’ to start off with quickly and also how to keep saving and investing money to gain the financial independence.