Money =/= Quality of Life
September 2, 2007 | Filed under Money
An article in today’s Age newspaper here in Melbourne focused on the amount of money needed to maintain a comfortable quality of life. Bob Cummins of the Australian Centre on Quality of Life at Deakin University suggested $100,000AUD annually as an estimate of the cost of comfort for the average family of four. Demographer Bernard Salt goes further to suggest $150,000 as the figure, with it rising to $250,000 within seven years.
What bollocks.
My parents are extremely low income earners (approximately $50,000AUD annually), yet my brother and I have never experienced a day of hardship in our lives, nor have we at any time suffered from loss of comfort or quality of life. Heck, our family has even saved enough to own our own home, and have holidays back in Hong Kong every four or five years.
By my estimates, a family of four need no more than $30,000 annually to sustain a style of living that is more than adequate. The figures rack up as follows:
Essentials
- $500 monthly mortgage payments for a decent three-bedroom home in the outer suburbs.
- $500 monthly for various utilities bills. This is a generous estimate as with proper water conservation (catching rain water in tanks to use to water plants and for dish-washing water), and proper power saving practices, you could conceivably cut water and electricity bills to under $300 for the lot.
- $100 weekly on groceries ($10 on bread products, $30 on meat, $50 on vegetables and dairy, $10 on other miscellaneous items).
- $60 weekly in travelling costs. Public transport on weekdays for all family members, with petrol for the car for weekend outings.
- $50 weekly for other essential purchases – hygenic and cleaning products, lightbulbs, batteries, etc.
- $500 bi-annually for school and education related expenses. School supplies, uniforms, excursions, camps, can all be covered with $1000 a year (indeed, this is a generous estimate!).
- $300 annually per person for clothing (I’ve proven previously that you don’t need a lot of money to dress well)
- $400 annually per family for private health insurance. This covers dental, optometry, and general health.
- $1000 annually for other insurance policies, incidentals and debt repayments.
Luxuries
- $40 monthly on capped broadband Internet (I pay $39.95 monthly for a 1GB bandwidth limit – after which I revert back to dialup speed)
- $50 weekly for entertainment expenses which include renting movies from the local video store (though most public libraries have an extensive DVD range for free hire), occasional trips to the movies, weekly visits to the local swiming pool, even semi-regular trips to the bowling alley and skating rink
- $600 annually for a week-long vacation to camping grounds, seaside resorts, etc. Going in off-peak season could cut the cost down to even $500.
Taking into account all those figures, that equates to only $30,200 a year to comfortably support a family of four. Even adding on $10,000 for other additional incidentals will only bring the cost of living to $40,200.
The average income of an adult (of the average marriage-able and child bearing age, who has completed high school with further qualifications – whether it be a college degree, short secretarial course, or apprenticeship) in Australia is approximately $50,000. So, even with one parent in the workforce and the other staying at home, you’re still looking at savings of about $10,000 annually – and even more as the children grow older and the second parent returns to part-time work.
So bollocks to Bob Cummins and Bernard Salt. Plasma TVs, luxury cars, cable television, home entertainment systems, private education and designer brands aren’t synonymous with a good quality of life, or investment in the future.
10 Responses to Money =/= Quality of Life
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It all boils down to personal opinion/preference, what you are willing to sacrifice your money on – what you deem as necessities and what is luxuries. It also depends on what your lifestyle is.
Generalising that $40k is enough to live by comfortablly may be suited to your own lifestyle. For example, some people who cannot afford the time to be frugal, may need to pay for the convenience. Or some people may need more expenditure in areas such as travelling because they live further away, or if their mortgage is $1000 a month over say 15 years.
Reply: Considering the fact that properties become cheaper the further you go from the city and public transport, mortgages, council rates and other bills like that aren’t as high. The money saved in those areas then goes towards fuel. As for mortgages, they can always be changed to longer timeframes. Change a fifteen year mortgage to a thirty year mortgage, and you’ll halve the monthly repayment.
I don’t think much of the “paying for the convenience of not being frugal” argument; it smacks of affluenza. The last thing the environment needs is another person spending money on frivolities, then dumping perfectly adequate belongings to the tip just for the sake of upgrading.
Mish on September 2, 2007 #
How on earth do you survive with only 1GB of broadband?
Reply: I use it up in a week, and then survive on dialup. *shrug* I’m a cheapskate and don’t want to pay $100 a month for more?
Nellie on September 2, 2007 #
And here I was thinking New Zealand’s broadband services suck! We can get 10GB a month for $60NZD…
Nellie on September 2, 2007 #
A little tale from the past: for my first job, as a farm labourer near Albury, in the Riverina, I was paid the grand wage of $1800 A YEAR: ie, $36 a week (plus free milk and half a sheep a week — we ate a lot of sheep!). Well, this was quite some time ago, as I am rather older than most of the people reading this blog. Nowadays, Mr Cummins needs that for ONE WEEK — and David Beckham needs that for, say, one minute. And yet, I remember that year as about the happiest of my life. So what do you conclude from that?
Peter on September 2, 2007 #
… Impressive! I dunno if our family of 6 could ever pull it off, though. When everyone’s home (ie May – August) our food and electricity bills jump because my brothers are 18 and 21 and love their food :P They also run the AC all night and sometimes all day, too. According to my mother, we spend 2,000 per month on groceries and the like, and I think rent for our place is also 2,000/month, probably more.
I blame the university/med school fees plus four cars for a lot of the money hogging, though. My dad doesn’t want to buy them off eBay anymore! :( He prefers all his extras, and is certainly the pay for convenience type. I guess he can afford it, his cardiology practice is booming. I agree with you though, although I might go the whole hog for internet since I don’t use any other luxuries like TV/movies, etc.
TWD on September 2, 2007 #
This article probably has more to do with a recent study that did end up finding a strong positive correlation between money and happiness. Of course, journalists tend to fudge certain points to make their articles more interesting to read.
At the same time, I have trouble finding a pair of jeans that are (1) pleasant to the eyes and (2) well fitting at the same time for less than C$300. So. I think I need to start travelling to Australia more often if you can do it for so little.
Mike Haddad on September 3, 2007 #
people are spoiled rotten these days and they don’t realize they can live without all the over expensive brand clothing and other luxuries
Chans on September 3, 2007 #
My mom can’t buy bread at 10-11pm at night. She works 9pm – 7am… Is that not a need for the convenience? Btw, groceries at knox isn’t as cheap as groceries at box hill. Living further out is cheaper? I dunno – More land, more tax – land you don’t even use..
And If I was stuck with a 30 year mortgage I probably wouldn’t have kids. I’d spend the rest of my life paying it off than funding for the next generation. Which I probably won’t unless I earn over 100k a few years after I graduate.
If we all lived in that kind of mindset – technology wouldn’t advance as fast as it has. Productivity would decrease in comparison to the rest of the world.
Reply: The rate of taxes is much different depending how far from the city you go. Where we are in Camberwell, for a tiny take-away shop, we’re currently paying $1200 a year in council taxes, not to mention that all utilities bills are rated higher here as well. I seriously doubt that even a large house out in Knox has council taxes rated at $1200 a year; in fact, I know that they don’t. For the three-bedroom house in Keysborough that we’re moving into, annual council taxes are rated at just $300.
The “more land” that you refer to is the problem – there simply is no need for “more land”. Why do people need McMansions when realistically, what they really need is just a house with three bedrooms, bathroom, kitchen, and living room? If people curbed unnecessary spending (luxury cars, plasma TVs, a wardrobe of designer clothes they don’t wear), then they wouldn’t need the $100,000 a year – that’s the point I’m arguing. Money cannot buy happiness, and you don’t need $100,000 to have a child.
What technology – smaller sleeker mobiles, larger televisions, more advanced sound systems? That kind of technology development is realistically speaking, the only type that would decrease if people curbed their spending, and I really don’t see that as a bad thing. Technology in the fields that really matter (medicine, science) would still advance, as when people downsize their material goods, they put more emphasis on the things that really matter – their health.
Mish on September 3, 2007 #
I meant the R&D put into it. If noone buys the product how will designers\engineers recoop the costs?
It’s like broadband. If everyone was on 1GB of broadband – noone would get anything done. I know I certainly wouldn’t and my knowledge would certainly be stunted. If you don’t pay for this service – how will they find the money to invest in newer services?
All households are different. Some people are fine living in close proximities with each other. If all my family lived in the house I am living in now, fine we have 3 bedrooms but I will mentally drive myself insane.
I prefer to not have a kid, pay off my mortgage first so that I don’t have to suffer insane amounts of interest. Once I have a stable roof over my head, then I’ll think about it. If you go take a look at ABS census data, having one kid more than HALVES your mortgage repayments.
Btw, I live in Knox and our rates are $1000/year. We don’t even have a train line or tram line, bus services are shit. I really like to know where council money goes.
Mish on September 3, 2007 #
I think people are simply reluctant to give up the luxuries that they assume they can’t live without.
You already know my feelings on having the biggest and best of everything. Pfft.
Jem on September 4, 2007 #