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INDEX OF CONTENTS 1. Its all about Choice, Your Choice
Lifestyle is about choice. Choice is about decisions.
Every Australian has freedom of choice. The choices open to each Australian are endless, as there are so many aspects to their lives and there is choice in every aspect. Our society is the collective result of all the decisions made as a consequence of these individual choices, and because there are so many options, it is becoming more difficult to accurately describe, "Who We Are", although some would like a single national identity. This identity will become more difficult to define as our society becomes more complex, and the choices open to us continue to increase. Chapter #2: THE GLOBAL FAMILY Globalisation has brought to the family a new meaning to the concept of competition and to economic success. Any approach to Action Management Systems for the household has to consider how the household is defined and how it operates, and how, with globalisation, the household concept and management systems have to transcend national boundaries. For this book, the focus is on the household but the terms, "family" and "household" will be used interchangeably to refer to this unit. A household is defined as a "task-oriented residence unit", while the family is a kinship group that may or may not reside in the same dwelling (Netting, R. M., Wilk, R. R., & Arnould, E (1984). Households: Comparative and historical studies of the domestic group. Berkeley, CA: University of California Press). A family household shares a dwelling unit, has at least some goals in common, and pools its resources to achieve those goals. Focusing on family households is appropriate as it is this unit that is the buffer between the individual and the larger society. Chapter #3: MODELING THE FUTURE Everyone has dreams or visions of what they might achieve in life. The need is to convert that dream into reality. The link between a dream and reality is a model that describes how the dream will be converted into reality. This is followed by a plan. Most individuals and most businesses and particularly business managers have a "model" of their business. Some people call this a vision of "what I want to do and where I want to go in life" These vary in the extent of their development and degree of documentation. The fact that people do have models in life or in business provides an immediate rapport with the supplier of goods and services; if they know what the individual wants then they can work to supply what they want. However not everyone knows that they have a "model" stored in their subconscious space in the brain. An approach in business planning is to explore alternative models in order to challenge the assumptions within them and provide evidence of how the performance of the business, through the model, could be improved. The model is a necessity and it has to be in sufficient detail to allow it to be challenged. Chapter #4: DESTINED TO BE MILLIONAIRES? This model of the wealth generation of the Australian Household, built by NATSEM (University of Canberra) predicts that most Australian households, where the parents are 35 years or less, are destined to become millionaires at current dollars. Your decisions, however, will determine whether or not this actually happens, or how and when this happens. The implementation decisions are in your hands. The model has been built takes into account many of the decisions that have to be made and based on how the Australian population makes that decision today, projects what financial wealth you will have in the future. This model takes into account factors such as:
Chapter #5: GROWING THE FAMILY ASSETS Your money matters! How much money have you got? How much money do you need? The answer to these questions depend on whether it refers to cash in the bank, annual income or all the assets. This topic is investigated here and it is concluded that most young people in Australia have the potential to become millionaires, as defined by the total wealth that they will accumulate through their lifetime. The information here will assist them to use the knowledge accumulated through the experiences of their parents and grandparents of how to have money and grow the family assets so that they can become millionaires. The most likely barrier to achieving this will be their self-management. It is your destiny to become a millionaire, don't throw it away. The secrets to success are bound up in understanding where assets come from, where they go to and how they can be accumulated. The knowledge on how to do this is not new but it is necessary for each new generation to understand the principles and especially how to apply them. How well do you manage your budget? Chapter #6: IS YOUR HOUSE AN ASSET OR A LIABILITY? The house may be only 25% of the assets of the average Australian, if the biological and intellectual assets are included. Statistics normally exclude these two asset classes and so the house is about 50% of the Total Household Wealth. It is often said that the first, and most important asset or investment the Australian has is their home. But do they know what return there is on the investment? Is it the best investment they can make? Chapter #7: TARGET A RETURN OF 15%+ pa? Good home management requires that the investment decisions are made on sound information and that they create value. A measure of value is the rate of return on the investment. "What is a good return and how can I get it?" Are equities better than the house, or fixed interest, or cash? Return of 15%+p.a.!!
Chapter #8: MANAGING THE HOUSEHOLD The home and family will only function properly if certain actions and activities are undertaken. It is necessary to combine the assets in different ways to ensure that the household works in unison to meet the goals in the plan. The five functions, that have been identified as drivers and are critical, are the income, savings, and investment, sharing and maintaining the assets. These activities have been defined as: 8.1 Assure the income.
8.2 Make savings.
8.3 Invest wisely and early.
8.4 Share the income or assets.
8.5 Maintain the assets.
These five actions can then be defined in terms of each of their individual components, for example 8.1 Assure the Income component requires the family to a have an Income Development Plan. Chapter #9: THE FAMILY CASH FLOW, SAVINGS AND INVESTMENTS Cash flow is what the family has left at the end of the day when you compare your income and expenditure. It should be positive; there should be a profit. If you were operating as a company the profit may be expected to be 20% to 30% of the income. This can be used for savings, investments, discretionary expenditures or paying off debt. What will your cash flow be for the rest of your life and will it be positive? The cash flow can be determined on a daily, weekly, monthly or annual basis. In most circumstances the monthly basis is the most relevant, but the position in and for retirement is most important. Knowing the daily position helps daily decisions. Income - Tax - Expenditure = Cash Flow = Potential Savings. Chapter #10: LONG TERM, BIG IMPACTS OF SMALL DECISIONS Small savings all add up. Save $30 per week on the mortgage, invest all the savings at 10% and over a 20yr mortgage it will add up to $100.000 !!! Choice Magazine recently had a list of five ideas that could save $600 per year. Invest that $600 at 10% for 20 years and that would yield $34,365 and teach your children to do it for 40 years and it is worth a quarter of a million dollars!!! The five ideas are: Minimise the use of cheques
Chapter #11: THE JOURNEY. The journey that now beckons is the management of the whole of living, for the whole of life. The success of the approaches discussed here, for example the Action Management System, are not instantaneous and not without considerable effort. Time is a key component and the diagram illustrates a possible journey that can be undertaken. Chapter #12: THREE HOT TIPS The tips are;
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