What’s Your Picture?

It seems we’ve been a nation of spenders, that is, until global financial markets crashed in 2008 and helped turn Australians into savers.

While the Australian household savings rate fell below zero in 2003, it made a big comeback after the 2008 global financial crisis. The current savings rate in this country is around 9.6% – much healthier than the 4.3% in the US and 3.3% in Canada.

Credit card spending has also slowed since 2008, and at the same time Australians have been strengthening their mortgage positions. It’s estimated that around half of Australian mortgage holders are now ahead on their repayment schedules.

So, that’s the ‘big’ picture on saving. But what about your picture?

Owning your home outright is the most fundamental basis of all personal wealth and financial security. In a nutshell, the goal to own your own home is about saving.

Owning your home is a forced savings plan. Often, you are forced to make sacrifices elsewhere in the budget to meet your mortgage repayments. For other kinds of investments it’s less of a big deal if a monthly contribution to the investment plan is missed.

For the majority of Australians, the equity in their family home is their biggest asset, and equity in your home is a powerful tool to help create additional wealth.

So consider what your ‘savings’ picture looks like today: Are you doing the bare minimum or could you do more? With a little committment and consideration, you too could dramatically improve your financial outlook.