Apr 22, 2010

Line of Credit

Queensland Health is in a fair spot of bother due to its bungled introduction of a bungled payroll system, which has caused significant administrative bungles resulting in employees being underpaid or not paid at all, leaving them feeling particularly bungled.

Now this is a serious issue, and I certainly feel for those whose wages and entitlements have been up, down or non-existent over the past six weeks.

But I'm pondering reports of families having to approach charities or default on loans because they didn't get paid by Queensland Health. I'm wondering - do we have a problem with money management, and do more of us skim the edge of the credit line more than we like to admit?

It strikes me that a pay bungle could happen to any of us at any time. Computer glitches, incorrect timesheets, human error - perhaps it wouldn't happen on a Queensland Health scale, but it could happen.

A Dun & Bradstreet survey last July found 4 out of 10 working Australians could only survive for 30 days on their savings if they were to unexpectedly lose their job. The survey also found that 38 per cent of households were expecting to rely on credit cards to cover household expenses in the latter half of 2009.

So if my maths is correct, 40 per cent of Aussies are essentially living pay to pay. But then maths has never been my strong suit - which perhaps explains why I could easily be counted in that category.  If I lost my job tomorrow, I would survive for perhaps a couple of months on savings, my credit card, and most likely the generosity of my parents, who still slip me the odd $20 note or bag of groceries even though I'm technically a grown-up now.

(I have reasonably moderate spending habits, by the way. I'm not your "drop $500 on a pair of shoes" type of gal. Primarily, I blame my ridiculously outrageously expensive body corporate fees, at well over $4000 per year. It's the only sucky thing about my utterly fabulous flat.)

Anyway, I realise many people have no choice but to live pay to pay. Mortgages, rents, utilities, groceries and transport costs bite hard and heavy into all budgets. Of course families with kids have extra expenses thrown into the bargain. Toss in any medical expenses people might have, and it's surprising sometimes that we don't have more people on the street (homelessness, of course, already being a huge social issue).

But really, really - should it be this way? Surely the global financial crisis has shown us the perils of dancing along the credit ridge - one false step or accidental wobble and you could go over.

I've been trying to build up my savings so I wouldn't necessarily have to rely on unemployment benefits if I found myself in that position - particularly now that Tony "The Budgie" Abbott would have me sent to the mines for being a filthy bludging ingrate.

My father is an excellent financial manager, and I learned many valuable lessons from him. I have some shares, I contribute extra to my super, I'm diligent with my tax and I'm almost obsessed with making payments on my credit card. I'm a reasonably intelligent lass, but I'm also a bit of a slacker, and I daresay I'm not the only one who finds the prospect of reading copies of Money magazine (surrupticiously left around my house by Dad) both daunting and a bit dull.

I suspect history would show it's always the low-income earners who are battered by every rough financial wind, while the wealthy have lawyers and accountants and off-shore tax havens to get them through it. And when you're living pay to pay, it must be hard to get ahead. Any random interruption to the norm (such as a pay bungle, or a motherfracking car accident) could stuff things right up.

I always wondered why I spent my final year of high school failing algebra and Calculus for no good reason, when I could have spent that time learning about mortgages, and super, and how to ask for a pay rise, and how to read the sharemarket. Of course, I'd chosen to do Maths B and not the so-called "Vege Maths" option, because at the end of Year 10 I was still relatively good with the numbers. But by Year 12 I'd lost all interest, was focused on the humanities - and I maintain I've never used the maths I learned in Maths B. But I daresay I've dealt with "Vege Maths" subject matter weekly. Poor choice on my part; but I was lucky due to aforementioned clever parents and a reasonably good grasp of my Economics subject.

Parents have a role to play. But let's face it, some parents are just not going to be equipped with the know-how to properly teach kids about finances, in the same way some parents just aren't going to know the benefits of healthy dieting and exercise. And hey, there are some parents who should definitely not be allowed to teach their kids how to drive.

So it's not to heap more upon our already busy teachers, but perhaps basic finances/social skills should be integrated into our schools? Perhaps dove-tailing with some anti-capitalist rhetoric about how we don't actually need ALL the things we think we need? That way, when the inevitable stuff-up happens -such as a pay bungle, or a motherfracking car accident - we might be better prepared?


  1. I hate money. I swap it for other stuff at every chance I get.

    Thank god for my wife.

  2. I am shit with money. We were pretty good, my husband and I and then we had kids and then well, we've just never really saved well and cannot tell you why. Well I can. It's called $700 per week for mortgage and food before we even walk out the door each week. Then it's insurances by about 7 or 8, school fees, kindy fees, petrol, car repayments, licences, internet, petrol, rego, rates, phone x 3, clothes, shoes (essential ones) electricity, gas and this is all just the stuff that we can bank on. What about the medical stuff, or loss of wages due to sick family members.

    So yeah, to be honest, if my husband or I lose our jobs tomorrow, we would be in some serious shit, fairly quickly.

    The cost of living has gone up. No two ways about it. I mean, 10 years ago, my husband brought home $500 per week as a plumber and we thought that was unreal. Stuff must have cost less back then.

    And yeah, I reckon we as parents totally have a role to play in educating our children. My daughter is made to bank 1/2 of her $5.00 pocket money per week to get her into the habit long term.

    Ahh, I hate thinking about money. How bloody depressing. x Good suggestion about the teachers.

  3. From an educator perspective - if you try and teach financal mathematics in high school you'll have parents howling you down. Many see it as a "dumbing down" of reading, writing and arithmetic (Only one of which starts an R.. you ignorant %$&*&!@). This is odd as most students do not take 'higher' mathematics nor wull ever use it post-school.

    Damned if you do and damned if you don't.

  4. Spot on GC, I too am one of those who if I lost my job tomorrow I could last maybe four months on savings, mind you that lump of cash is all I have towards a house deposit and that dream is looking less and less likely.

    Its great the stuff you learned about fiscal responsibility and I wish I was half as orgainised as you. But I do wonder if "basic finances/social skills" can be taught or soaked up in our family environment.

  5. I used to be terrible with money, but once I started to save it became a habit I liked. Now the thought of not having money in the bank frightens me.

  6. My rough guide - Poor - could only last a year on savings. Middle class - could last a decade on current savings. Rich - could take the rest of your life off if you wanted to.

  7. Nice post GC. 'Tight ass' me and the 'monkey see, monkey want, monkey have' hubby would be in that correctly calculated 40%. The latest; he promised no cows until we were 3G ahead but alas he has found a clever way to fund the up front purchase and how can I deny his longing face.