Like other great leaders she had some classic quotes, some of which I thought were particularly applicable in the light of the week past. Rudd would do well to take heed of this one:  “I always cheer up immensely if an attack is particularly wounding because I think, well, if they attack one personally, it means they have not a single political argument left.” In that case Rudd must be delighted indeed.
 

One of Thatcher’s takes on politics was: “It used to be about trying to do something. Now it’s about trying to be someone.”   With Gillard having cemented her place as leader, she has reiterated she is focused on “doing her job”, including trying to negotiate a long list of policy reforms.  Got me thinking about Doing versus Being and why we are hung up on one or the other?
 

To do something is measurable – either its done or its not, perhaps a work-in-progress. Either way, we are able to clearly ascertain where we stand, it is easy to quantify and therefore, to judge.
 

To be can sometimes seem passive. But it involves more than meets the eye – a more introspective path of personal growth, with development not always evident to the outsider.
 

Sometimes people are not satisfied with just letting things “be”. Especially when it comes to investing, we are anxious to keep changing things, sometimes with sub optimal results. Changing our long-term investment strategy on the basis of the 24-hour media cycle is not a good idea as difficult as that may be. In this case, just to be takes immense discipline and resolve.
 

When it comes to managing our money I think we need to put our strategies in place (the doing bit), so that we can get on with living our lives to the fullest (the being). Because remember the following, well put by The Iron Lady herself:

“No one would remember the Good Samaritan if he’d only had good intentions; he had money as well.”

Phew…I feel a lot better now. All those in favour say “Aye”.
 

But don’t we all have our own “underminers” and “distracters” when it comes to our investments and money management?
 

We are bombarded with an avalanche of information on investing, the markets and the economy from our TV’s, computers, phones, newspapers and magazines. You can’t read it and hear it all but it can be a mighty big play on our minds that we have to keep up with everything or the world will cave in and our money with it. It all seems so incredibly URGENT!
 

Then there are those that seek to set us off course by raising their eyebrows when we happen to mention what we have invested in. Uncle Don is convinced shares are evil personified and no sane person should have them in their portfolios. Aunty Joan can’t believe you wouldn’t buy your own home because property always goes up, you know, dear.
 

Lucky for us (but not poor Julia) we don’t have to answer to anybody else (assuming if you have a spouse you are operating as a team!), when it comes to running our own little domain that is our wealth.  No-one is going to vote you out at the next tribal council because they don’t like you or your strategies.
 

We set our course by visualizing and talking about what we want, we decide on how we are going to get there (with the assistance of one or very few trusted financial advisers) and if we veer off our path, guess what? The only person really to blame is…ourselves! Oh the joys of responsibility and accountability.
 

My message here is one of focus. The world is a complicated place and making decisions about how to invest and grow our money is never so black and white that it comes with guarantees. We take the time to do our research on good advisers and what and how much to invest. We do the best with the information we have at hand and we strike out on our path. Making corrections in itself isn’t wrong but only after due consideration to the options.
 

So what is wisewomen’s views on the giving and receiving of pocket money, how much, how young can we start and on what basis do we make it available? Simple answer: Pay it! Why? To teach four important lessons to your budding consumers...

The first 2 I’ve borrowed from Malcolm Gladwell in his book, Outliers “The Story of Success”. He outlines three criteria that make a job meaningful - complexity, autonomy and a link between effort and reward. Forget the first – no parent wants a complex system, but the other 2 are pertinent in the context of a workable pocket money regime:

Much as we may resist it at times, our children need to learn to fend for themselves so they can flee the roost as well functioning adults. They yearn for independence. Paying a weekly or monthly allowance into their bank account helps them to take their first steps towards handling their finances, so that when they enter the workforce the novelty of their first pay packet doesn’t send them into a tailspin of frenzied squandering.

Don’t give them money for nothing – make it clear that the receipt of a weekly or monthly amount is dependent on fulfilling their pre-designated chores around the home. No chores, no reward. This lesson will hold them in good stead down the line and hopefully engender a strong work ethic.

The next two reasons are equally relevant to the first 2:

Ever been shopping with a pre-schooler? The nagging can drive you mad. But give them $2 and tell them they can spend it on whatever they wish and they suddenly become more discerning. It works with any age - although as they get older you may have to part with a higher amount! 

Giving children a regular fixed dollar sum that is their responsibility to manage, teaches them constructive life-long lessons in budgeting and reining in their shopping habits. Just don’t bale them out when the money runs dry as no lesson learnt there…

Saving doesn’t come naturally to everyone – like lots of things it is a discipline to be taught and learnt.   Honing the practice of “Pay-Yourself-First” (ie: transmitting a nominated amount to their online savings account first thing every month), gives them competence in the basic steps of money management and building wealth. Having these skills will help them to avoid the all too common problem of people living beyond their means and drowning in debt.

What do we want for our children?  For them to develop into measured competent adults who can handle their finances responsibly so that they can achieve their life goals. Pocket money, trivial and insignificant as it may initially appear, plays a vital role in preparing our kids for the outside world. It also opens up scope for conversations with them around responsibility, discipline, saving and budgeting.

So how much pocket money do we give them? You and YOUR budget are the only ones who can answer that question…
 

So, here we are back on deck again. The children have been packed off to school (humid and raining of course), the tan lines are slowly disappearing and February detox has begun. Somehow, despite all our best intentions, it’s hard to feel as if the working year begins until after Australia Day.
 

But get our heads back in the game, we must. So, where do things stand? I am harbouring a strong desire to take stock of where we are and to tentatively look ahead to the coming year although making predictions is notoriously difficult (even for the most highly regarded and qualified professionals in economics and finance, to which I can make no claim).
 

A funny thing happened in January. Despite the pervasive doomsday scenarios the markets actually rallied 5% in January for the first time since 2006. Can it be that the markets are looking through and factoring in all the bad news surrounding Europe and US debt crises? Has all the hand wringing and procrastination by the European autocrats in dealing with their problems left the rest of us falling asleep waiting for them to take some decisive actions and pondering if it is all as bad as it sounded at the end of last year?
 

Make no mistake, if there is a cataclysmic event in Europe the reverberations will be felt in markets worldwide. However, there are positive signs emerging in the US economy giving a few analysts something to smile about. I reiterate my statement on predictions – they are always perfect or imperfect in hindsight so I am making no bold prophecy of spectacular share market gains. It’s very much still a wait and see game.
 

All the talk has been of lower than expected inflation and the potential for further rate cuts after the RBA dropped them by 0.25% on Melbourne Cup Day and then again in December last year. I wouldn’t be betting on banks passing on full rate cuts (if any) given their long term funding continues to be higher than expected. To hedge your bets it may be better to look at shorter term deposit rates so if rates do a U-turn in an upward direction you are well poised to take advantage.
 

Again the doomsday scenarios persist (but don’t they make great copy!). There have been drops in the market, no question, however it seems to be in a rather calm and quiet manner not in the precipitous fashion predicted.
 

For homeowners looking to upsize (with the corresponding ability to finance this purchase) – it represents a good buying opportunity. The lower to median house prices have remained relatively steady. It is the premium and prestige properties (not to mention the coastal holiday home market) that have real estate agents recommending to their clients that they “meet the market” and drop their prices. All power to you if you sit in the lucky group of buyers accessing this market.
 

However, I wouldn’t be rushing out to buy an investment property on the basis of strong capital gains over the next few years. It would be a brave property forecaster who started blowing that particular horn. Rental yields have been holding and hopefully if you do own an investment property, the mortgage is not onerous. If not, take your medicine as the Europeans must, and find ways to “deleverage”. If that’s through trimming your budget or doing more on the income side (working on your own economic growth plan!) either way will help get the black cloud of debt off your shoulder. I know, I know, always easier said than done.
 

So that’s my two cents worth on the state of play for this year. Hope that gets you thinking and your head back in the game after any Christmas binge you may have had. I, for one, am certainly feeling the after effects in my purse and in my jeans. On that note I bid you adieu and head off to my 3^rd gym session for the week. Oh yes, my exercise halo has taken on a rather nice shine in the last week. More on that later.