Don't expect your children to look after you so set a super goal and start saving

IF you have a burning money issue, or you want to win a fight with your spouse, put your questions to Barefoot Investor.

Frustrated woman

IF you have a burning money issue, or you want to win a fight with your spouse, put your questions to Barefoot Investor.

Q Dear Scott,

As a widow who didn't start her career until she was 45, my biggest hurdle is getting enough super to live on when I retire at 67.

I'm throwing everything into it that I can, but I know I won't have enough. I earn $43,000 and am debt-free, but I pay rent.

I live frugally and am not a shopper or spender. I save for what I want (my parents taught me well) and do not use a credit card unless purchasing online.

So my question is, apart from getting multiple jobs, how do I get enough super?

Or do I stop worrying and just hope my children will look after me?

Kim

A Hi Kim,

Don't rely on your kids to look after you. You don't want to be a burden - that's a degrading way to live. Besides, you don't need to - you have options.

The most important thing is a goal - you need to know what retirement figure you're shooting for.

Now, when you retire you'll have at least two forms of income, your investment income and the pension.

The maximum rate of age pension (including rent assistance) is $24,216 a year. Right now you're living off around $37,000 a year after tax, which means you've got a gap of about $13,000 a year to plug if you want to maintain your current standard of living in retirement.

To do that you should be shooting for a $250,000 super retirement balance. Over the longer term, investment gains will do much of the heavy lifting for you (if you invest in shares - not if you stay "safe" in cash).

But you'll also need to continue to work, and sacrifice as much of it into super as you can.

COFFEE CLUB STRATEGY

Q Hi Scott,

I have a coffee shop that is going OK, and through this I've paid off debt and managed to save a little. But I'm very nervous about spending money on my business.

It's taken me a long time to save some and I would want to be 100 per cent sure that putting it into the business would result in more takings. I would welcome any advice.

Cheers, Simon

A Simon,

The best return on your investment will come from spending money on marketing.

Forget about fancy websites or advertisements that can cost a lot of money and are hard to quantify.

Instead spend your money on promotions that will put dollars in your till as quickly and as cheaply as possible.

That could be holding an event at your cafe, offering a two-for-one special (which brings more people in at a lower margin) or introducing a loyalty scheme for your best customers.

GROUND ZERO START

Q Dear Barefoot,

I grew up with poor financial literacy and have a long history of bad financial management.

In 2011 I found myself with $15,000 in debt across four credit cards - cards I've held for years while paying only the minimum amount.

After aggressively paying off my credit cards this year I finally find myself at my economic "ground zero" - that is, debt free for the first time in about a decade!

As a 39-year-old single woman earning $100,000, I want to become financially stable. There are so many choices out there - buying a property, investing, saving, etc, etc. Where do I start?

Evelyn

A Hey Evelyn,

Great work! Digging yourself out of debt over a number of years is the hardest thing you'll do financially - the next steps are a cakewalk in comparison.

I want to amplify that sense of security you're feeling right now, and there are three ways we'll do that:

First, open a Mojo account (a high-interest online saver) and chip away at it until you've saved three months of living expenses.

Second, become an investor. Dip your toe into the market by buying $5000 in Argo (ARG) shares.

Sign up to their dividend reinvestment plan (DRP). Watch your money grow.

Third, buy an apartment in four years' time - with a big deposit. To get there, open up a First Home Saver Account (FHSA) and start putting in at least $6000 a year, and the rest in another online saver.