Start Saving to Get on to the Wealth Track at MoneyTree AsiaPac - Developing Tomorrow’s Financial Geniuses

Genevieve Cua Thu,

Aug 07, 2008
The Business Times

WEALTH is often measured by a posh home, luxury car, several private bank accounts, and a fat salary.

But Paul Clitheroe, probably one of Australia’s most visible spokesmen for financial literacy, says it is not how much you earn that makes you wealthy. It is how much you spend.

That is, frugality and a savings habit will help you get started on the wealth track. ‘Globally no one understands that,’ he rues.

He recounts that just the day before, he had a four-hour conversation with a bank chief executive earning a $3 million salary, and saving nothing. ‘That’s common. When he got home at night, doing his own budget was the last thing he wanted to think about. He spent the whole day doing the bank’s budget. I could teach him nothing. Every good principle of money advice he knew. He will see a financial planner next week; he will know more than the financial planner.

‘I told him - you’re far better educated, but you have to shut up and listen. What the planner will do is to make you do the basics, a budget. You should be saving $1 million a year. Then he said - ‘I got it! I thought the financial planner was a genius who is going to make me rich.’ ‘

Mr Clitheroe was one of five founders of Australian financial advisory group ipac in 1983. The five friends pooled personal savings of a total of A$100,000 (S$127,000) to start ipac. In 2002, ipac was sold to AXA for about US$250 million. Today the group, which has an office in Singapore, manages more than US$14 billion in assets. Four of the founders remain active in the business.

Mr Clitheroe, who has written books, says: ‘My role was always to be out in public to talk about the value of advice.’ Between 1993 and 2002, he hosted a Money programme on Australian television, and has been chairman and chief commentator of Money Magazine since 1999. Currently, he is ipac executive director, and also chairman of the Australian government’s Financial Literacy Foundation.

‘What is financial literacy? Of every dollar I earn, I spend 80 cents and put aside 20 cents. You have financial literacy. The more educated people are, the more they earn, the less likely they are to save. The people in Singapore who most understand budgeting will be the poorest who wonder how they are going to buy rice tonight……………

This article was first published by The Business Times on Aug 6, 2008. Click here to see article FULL online.