PREFACE

 

‘Fortune, that arrant whore

Ne’er turns the key to the poor.’

Shakespeare Henry IV   

Mary Poppins is a children’s story written by P.L.Travers. The story is set in Edwardian England and tells of a perfect nanny who creates wonders as she takes care of two children in her care. The movie is delightful. It won thirteen academy award nominations and is today, a part of every child’s video collection.

You know the story and you enjoyed watching the movie. However, have you looked at the story in any depth? If you have, how do you explain to your child that Mr. Banks, as a bank manager of upper English middle class earned a salary that was large enough to support a wife, two children, three maids and a gardener as well as a nanny?  How do you explain that the house the family lived in probably did not have a mortgage and that the only worries the family had was Mrs. Banks’ suffragette demonstrations that led to her neglecting her children, hence the arrival of Mary Poppins?

We all know that the story is fiction, but this is what our children have been raised on... fairy tales. The story however even though it is fiction, did give us a financial target. If this is how we believed an Edwardian middle class family lived, then why are we, as today’s middle class not able to live the same way?

Unfortunately things have changed. At the start of the Twentieth Century, although a husband’s salary may have supported a wife, three or more children, a maid as well as a cook and a gardener, by the end of the First World War that salary could only support a wife, two children and one maid. The family, if they were upper middle class, probably owned their house without a mortgage. The husband worked an eight hour day while his wife stayed at home and reared the children besides looking after the home.

By the end of World War II , it took the salary of both the husband and wife to support two children, possibly three. The family owned their house in most instances with a mortgage. They would probably visit the local pub down the road for recreation at least once a week.

In today’s world, it takes the salary of a husband, plus the salary of his wife and more than often the assistance of a grandparent to support a family of one or two children. There is no maid, cook or gardener yet this family lives a life that would be the envy of Mr. and Mrs Banks. Today’s world offers television, computers, luxury automobiles, indoor toilets – so many things we take for granted. But, do we live a better life? Is our life less stressful?

The answer is decidedly, NO. So what has gone wrong? Admittedly, social values have changed, for example, ‘The PILL’ has given women a sexual freedom they never had at any time in history. This is something I am sure Mrs. Banks as a suffragette would have ‘hurrahed.’

Because of birth control, women today, are able to do a man’s work, without the handicap of an unplanned, ill-timed pregnancy. Many women have reason to become CEO’s of major Corporations and leaders in the political world.  Yet why, in today’s society, does it still take the combined income of two careers to support a family when, at the start of the twentieth century, it took only one? Admittedly inflation has played a major part, but statistics do show that salaries have kept pace with inflation. What then has changed?

The answer, I believe, is that we have become a materialistic society. We have been conditioned to own, not one but two even three television sets. We need two cars, a boat and a cottage. We need that three, if not four week holiday every year, flying all over the world , and we need – wait- do we truly need or is it that we are conditioned by the constant marketing bombardment that confuses ‘would like to have’ with ‘must have.’  Today’s society has more wants and needs than society at the turn of the twentieth century. Admittedly, the governments of today have levelled the playing field, taking from the rich and giving to the poor.  This they achieved by taxing the rich.  However, when you talk to Warren Buffet, one of the richest men in the world, he says that he only pays 16% tax, whereas his secretary pay 23% tax, and this in that truly democratic country, the United States of America.

At the turn of the twentieth century, although the Banks family was upper middle class, they paid far less tax than a family today. In fact they paid no taxes, because Income Tax laws were only implemented to pay the costs of World War I, and were supposed to be only a temporary measure.

Government policy regarding the distribution of wealth has, in today’s world, created a far larger middle class than at the turn of the century. One should ask, ‘how many upper class families existed then and how many families were in the lower class, or just above the poverty line, then compare those figures to today’s figures. Taxes and social welfare strive to give everyone an equal opportunity to achieve, with equal living and educational standards. Opportunity combined with education and hard work, are the hallmarks of today’s success.

During World War II, with the men fighting at the front, women were brought into the work pool in great numbers. Women were prepared to work for lower wages than men yet do the same job, even if the work was physical. Companies found that by employing more women and less men, profitability increased because salaries paid were lower. This fact, combined with higher taxes to support a government that became more socialistic, plus a more materialistic society, made it necessary for a household to have two earners to provide the same buying power as one earner. Living standards have increased, but it now requires two salaries to support a family at that standard. Hollywood showed us the glamour. Reality is becoming that glamour. Simply count the number of privately owned swimming pools today as compared to that of 30 years ago.

When we look at countries today, we find that a large portion of the population believes that their government owes them a living. The reason for this is that high taxes and lax budgetary control, effectively destroyed entrepreneurship. The pendulum in levelling the playing field has swung too far. A person who is prepared to work 18 hours a day, either through love of work or love of money, is entitled to the extra benefits they can purchase. They create businesses which in turn creates jobs. They take the financial risk and should be rewarded for taking that risk, not envied or overtaxed because, if they are wrong in their decision making, they stand to lose everything and place themselves, their family and their employees in financial danger. A person who spends ten years at a university living on the bread line while studying to receive a qualification, should decidedly earn more than a person who studies for one year. Unless of course you are a Bill Gates, Steve Jobs or Mark Zucherman, where imagination allowed them to create revolutionary businesses.  

The majority of workers are salaried. Many businesses pay their employees an hourly wage, limiting the amount of time a worker may work in a job. This is to prevent paying benefits. Those lucky enough to find a job with a fixed monthly wage, work hard at their job, because there are many knocking at their door eager to replace them. Hourly wage workers never know exactly how much money they will have earned at the end of the month and for this reason find balancing a budget difficult.

This book is a small but hopefully a good attempt to show you how to balance your personal budget, irrespective of what you earn. The book will teach you how to create a surplus and how to invest that surplus efficiently, allowing you to retire and become bored early. Remember, it is not what you earn that is important it is what you keep.

A good friend, turning 65 years old is being forced to retire because of the contract he signed with his company. His son said to him, “Dad, you should go and learn how to cook.”

“Why?” he asked puzzled.

“Well, Dad, with Mom at work and you at home, you will be cooking our meals.”

 

The examples and spreadsheets included for guidance have been made as simple and as practical as possible. Do spend time and effort practicing what we suggest. The result will be well worth it. Obviously many examples and exercises may not fit your circumstances exactly, but they are guidelines that can be adapted to your needs.

Finally, when working through this book to prepare your budget, use a pencil and always have an eraser handy, although in today’s computerized society, designing a workable spreadsheet is easy.

I have included spreadsheets of how a budget should be prepared. If you are not computer literate, sample pages are available to photocopy and use.

Good luck and good budgeting and never forget that…

 

Everything cometh to he/she who waiteth,

So long as he/she who waiteth worketh like hell while he/she waiteth.


This BOOK is available from AMAZON.COM for the Kindle eBook.