According to a recent study published at,* the average Australian may be hard pressed to find extra income for superannuation contributions. The data would appear to say that Australians are spending most of their take home pay on necessities and don’t have a lot left over at the end of the month. But is that really the case?

Let’s take a look at what the study says first, then we’ll tell you what we see from a financial planner’s point of view.

By the Numbers

According to the study, 20.5% of the average Australian’s take home pay is spent on housing. This works out to $990 per month for every household in WA spending the most at $1249 per household and SA spending the least at $787. It must be remembered that these statistics include those living in regional areas.

Household bills are the next highest expense, weighing in at 15.5% or $633 per month. For the record, this number, which included power, telephone and Internet bills, surprised a lot of economists. Groceries averaged $531 or 12.1% of monthly income. Transport was $299, which worked out to 6.9%. Australians spent $174 or 4.2% on health expenses.

We still find time to spend discretionary income, too. Clothing accounted for $141 per month or 3.2%, while entertainment and dining out took up 4.3% or $203. The number for holidays was $2952 per year.

9.9% of household income or $428 per month was spent on paying back credit cards. $329 per month or 6.4% was put in savings.

What the Numbers Mean

Adding together the numbers above, 69.1% was spent on necessities such as putting a roof over one’s head, going to work, eating, staying healthy and paying bills. Even if we were to assume that everything charged on credit cards, telephone, Internet and power usage was all “necessary,” we are still spending 30.9% of our income on entertainment, vacations and other discretionary purchases.

Formulate a Budget

Remember that all advice on this blog is general in nature because there isn’t a lot of advice that we can actually guarantee to be relevant to everyone’s situation. However, we think it is safe to say that most individuals and families could benefit from getting a handle on their finances.

The process of creating a budget accomplishes three tasks. First, it forces you to figure out exactly where your money is going. For most people, this is an eye-opener. Second, it forces you to pay attention to your spending. Third, it teaches you how to control your spending and divert discretionary purchases to purchases that further your future.

It is easy to formulate a budget. You simply figure out how much you have coming in and then figure out what you are spending it on. It is easy to figure out which purchases are necessary and which are discretionary. If you figure out how much money you absolutely have to spend, what’s left is discretionary.

You can then choose how to spend your discretionary income. You may want to spend it all on a good time, but if you are reading this post, you probably want to figure out a way to use that money to help secure your future.

Call Approved Financial Planners

For individual and specific financial advice, call Approved Financial Planners. We have been serving Perth since 2005 and our financial planners have a combined 40 years in the financial planning industry.

We can help you formulate a budget and help you formulate an investment plan. We specialise in superannuation and can help you set up a self managed superannuation fund. We have helped a lot of Perth residents secure their futures and set themselves up to fully enjoy their retirements with the incomes they deserve.

There are a lot of things you can do yourself, but we recommend against trying financial planning on your own. Call Approved Financial Planners today: 08 6462 0888.

*Story published 23 June 2014: