Money talks, but heaven help those who talk about money
Sydney Morning Herald
Saturday November 28, 2009
Money, get away. Get a good job with more pay and you're OK. Money, it's a gas. I don't know what Pink Floyd was smoking when they recorded Money, but they were on to something. Money is a gas all right, one that warps much of our thinking.We like money, we like having it and we like spending it. But we don't like talking about it (except for property). People will happily entertain the slightest of acquaintances with tales of their sexual encounters, triumphant or disastrous, but crawl over broken glass before saying what they're paid. Not to friends, not to family, not to anyone. Income is between you, your employer, and begrudgingly, the tax man.Salary secrecy is an odd mark of respect for the interests of your employer over that of your colleagues. Your boss tells you never to reveal the size of your package, raise or bonus, and you never do. Civil society would break down, what with all those other people wanting one too.I had hoped this might change with this downturn, as not talking about earning makes it harder to talk about the best ways to use what you earn. The downturn was meant to make us all thriftier. We would return to the way our grandparents lived - reusing, saving, going without the unnecessary. Being a tight-arse would enjoy a resurgence. Picnics would be in, Tetsuya's out, and the economical cask might claim its sensible place at the centre of Australian social life.But no. We're still spending, spending, spending. According to Reserve Bank statistics, we put more purchases on our credit cards in June, July, August and September compared to the year before, despite the global financial crisis. The most recent available figures, for September, show Australians now owe $45 billion on 14 million credit cards, up 2.5 per cent on August. The average card is $3214 in the red.Despite that, we seem to think we're pretty good savers. In 2007, the Federal Government's Financial Literacy Foundation surveyed 7500 Australians, 90 per cent of whom said they could budget, 89 per cent said they could manage debt and 88 per cent claimed an ability to save. While 71 per cent of credit card balances in September were accruing interest, 76 per cent of those surveyed in 2007 claimed they paid the total amount owing when the credit card bill fell due.That contrasts with the fact - as reported by Ross Gittins and Rodney Tiffen in How Australia Compares - household saving as a percentage of disposable income between 2001 and 2007 was negative 0.9 per cent. That's down from positive 3.2 per cent between 1996 and 2000. The only other of the 16 developed countries surveyed with a negative figure was Finland, and even the devil creator of the subprime crisis - the United States - recorded a small but positive 1.4 per cent.Yet in the US, a Harris survey in June of 4500 working adults found 61 per cent admitted to living from pay day to pay day. That's partly downturn, and partly a permanent figure: it was 49 per cent last year, and 43 per cent in 2007. Of those who earn of $100,000 or more, 30 per cent lived that way, up from 21 per cent last year.Perhaps they're just more willing to own up to not being in control of their finances. Mismanaging money is seen in similar terms to mismanaging your weight; we know we need to spend less than we earn, and to never a borrower nor lender be (except to buy a house). Yet many just can't seem to do it.It's difficult for those who start life burdened by student debt. Once, we were savers at school, now we're spenders at university. How do you get in the habit of saving if you start so deep in the red? So anything that gets us talking about money, and how to use it better, should be encouraged. That includes the Commonwealth Bank's plan to boost its saving schemes for schoolchildren. Predictably, some complained about the inside running it might give the bank to the children's future business.But if it turns more Australians from borrowers into depositors, it's worth it.
© 2009 Sydney Morning Herald
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