I don’t know about you, but I’m sick of half-arsed emails and blog posts about this one’s 2015 planning, and that one’s Top Five tips for the best year ever, so let’s get this last virtue of wealth out there and get down to the business of actually living.

Global events notwithstanding.

Now that we have planned for the virtues of:

  • beauty – living authentically and taking care of our physical well-being and surroundings (body, presence, home, and garden)
  • friendship – treating the planet and other beings as well as we want to be treated
  • pleasure – agreeing to seek out new experiences as well as make time to do unproductive things.
  • wisdom – understanding ourselves and making choices based on the things we value

We’re moving onto wealth.

VirtueSub-ProjectExplanation
Wealth

I feel prosperous, my income
meets my needs.

incomeI have sufficient income to meet my needs.
expenseI am frugal and spend money wisely.

Cut and dried, the virtue of wealth is all about money (or maybe goods in lieu).  It’s about being able to pay the mortgage and put food on the table.  And not just for the now, I need to ensure there is money for the future too.

While a life of genteel poverty does sound very Jane Austen romantic, I’ve already mentioned that I value the capacity for choice and I am sorry to say that money is an essential component for that – beggars can’t be choosers.

The Virtue bit of the Virtue of Wealth

Putting money aside for the future is worrying.  Last year, the Association of Superannuation Funds of Australia (ASFA) suggested a couple wanting to live “modestly” for twenty years would need $33,120 per annum, and this would require  a lump sum of $431,000 to invest on retirement.  Or to live “comfortably”, $57,195 from a lump sum of $744,000

Following the changes in the cost of living reported in the September 2014 quarter, ASFA suggested $58,326 per annum from a $510,000 investment (must be a pretty good investment).  Though the $58k assumes the inclusion of a part Aged Pension which rises as the investment reduces.

Shockingly, the difference between the “modest” and “comfortable” lifestyles is leisure and recreational activities, the capacity to buy (replace) household goods, having private health insurance, a car, clothes, electronic equipment, and holiday travel.  Or at its most basic level, to be able to enjoy the things that I (we) currently take for granted.

So it appears that managing wealth optimally requires a candle at both ends approach  – maximising incomings and minimising outgoings.  Saving more and getting used to living on less.

I am now classified as “long-term” unemployed, i.e. unemployed for more than 12 months.  Statistics suggest that I only have a 10% chance of gaining employment in any given month and I am more likely to gain transitory than permanent work.  And as the length of unemployment increases, my skills and social network will depreciate further and I will be more likely to become unhealthy and unhappy.  And (according to the statistics) I will probably give up looking for work all together. I’m dispirited just seeing it written down…

Diversification

So with that in mind, I can’t help thinking that just as a good investment portfolio is diversified, I should diversify my income streams:

  • continue to seek paid employment – permanent, contract, part-time, casual and/or temporary – anything maybe?
  • examine my options for developing a business, or the modern version of piecework
  • make bead necklaces?
  • rent out a room?
  • literally beg?

And for the sake of prudence, spend less without getting too obsessive about it:

  • pursue a Lean shopping methodology – systematically reduce waste by not buying more than I need, e.g. menu planning
  • follow with Just-In-Time-Delivery, e.g. use up my notebook stockpile before I buy the next one
  • set budgets e.g. a clothing allowance (ouch!)
  • examine phone, insurance, etc. providers and negotiate better rates
  • walk a bit more and drive a bit less

I also feel I should also pick a target income for the next twelve months.  Half the ASFA comfortable couple income at $29,163? (relying on DB to cover the bulk of household costs).

Funnily enough, I remember that when my salary first exceeded $29k, and I thought I was rich – so much money.  The notion feels intuitively right, though the number doesn’t seem like much of a contribution to the household accounts…

With that in mind, I have gone through a process to determine my hourly freelance rate which should I be fully self-employed would provide a living wage.  But I am going to keep this stretch target private.

What are your thoughts on this – would you pursue the same approach or try something else?  How would you set a target income?


Photo of the contents of my money box – not enough to bank yet.


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