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With the Global Financial Crisis perceived to be behind us, people are out and about in Australia spending up big like it never really happened here. I suppose it didn’t for a lot of people.

I try to keep an eye on news articles, and forum posts on the Aussie dollar and inflation figures. While I’m certainly not an expert, I’m slowly beginning to understand how things work in this world of ours.

Money is important to everyone during these times. It puts food on our table and clothes on our back. It’s most people’s primary concern, and as a result they want more of it.

My mum was talking to me the other day about her superannuation, telling me how she needed more in there so she can retire comfortably. Already in Australia, super funds have taken huge hits in their returns. Over the last few years people have lost more money than they have made in their super fund, yet we are still all told that we should invest all of our money into super for retirement.

Following the Real Estate Bubble in Australia and the opinions of those who know their economics, it’s very plausible that our country will suffer high levels of inflation in the future. All to support a housing bubble.

So we are all banking on being rich. People invest for the future, so they have more money. Shares, property, super and so on. It’s all so we have more money, later.

The question I ask everyone is, “what is the value of a dollar?”

What’s it worth to you? What will it be worth in 20 years time? Are you banking on being rich?

I tell my mum to plan for the future. In my opinion, she should be planning to have everything she needs before she retires (within reason of course). Planning to have the money to do it later is a dangerous idea. If inflation hits, and the car that once cost $25,000 now costs $100,000, she’s stuffed!

I keep telling my friends who are rushing into the idea of buying a house to take their time and get to it when they are ready. No one will listen because of the free money on the table from the government, and the fact that they want to get in “before the next boom”. They aren’t necessarily making money from a boom. They are making “more dollars”, but not actually becoming wealthier in the long run. While their house is “worth” more and if they sell they will have “more dollars”, everything they will want to buy with those extra dollars will be more expensive. Essentially, they are perceived to be richer, yet everything is more expensive. They are back at square one. Essentially, if their money is making 5% interest, and inflation is 5%, they aren’t making anything. The numbers are just changing.

True financial planning, true investing is beating this situation. You need to make more money than inflation is absorbing.

It’s amazing how common sense this is for most people, yet how completely confused some people are by this information. To some, a dollar is worth a dollar, nothing more.

I’ve come to the conclusion that a passive income has to be the best way to live – set yourself up now, and reap the rewards later!

For instance, I run a few websites at the moment, this one included. The goal is to see (it’s just a test) how much money you can actually make from having a few Google AdSense advertisements around the place. In around two months I have made a whopping US$13.01. I tell my friends about it and they just laugh at me, “It’s not worth the hassle” they say.

For $13.01, sure, it’s not. But what about after a year? That $13.01 becomes around $80. Now quite obviously I’m not going to be able to survive on $80 a year any time soon, but I think this is where most people give up. This is residual income – from time to time I need to add some content or do some maintenance, but essentially when I’m not directly working on making money, the content is still working for me.

Share dividends, interest on your savings and so on – there are plenty of ways to generate small amounts of income that can one day build up to a considerable amount. For some people, it’s all about investing money and supplementing their current income, whereas for others it’s about investing a small amount of money and time, to just earn enough to get by.

It’s typical of people nowadays to discount the little things. They discount the small amounts that they spend as nothing. $5 a day is easy to spend, but after a year that is $1825! Smokers for instance, have a real financial benefit from quitting, if nothing else. Turn it around, and imagine running 5 websites making $5 per day – that is over $9000 a year! I could invest that money into shares and use the dividends to generate more income too. It’s ongoing, but there is real potential in it.

What I need is an idea. The world is full of them, but unfortunately my head isn’t. I need to make more websites, I just can’t think what I should make them on and how I can make them different from everyone elses.

This blog is pretty much the exception to the rule. While I do have an ad on the page, it will never really generate much, if anything. Everything I am reading now is about Search Engine Optimization, page rankings, and so on. You really need to push the content towards the viewers, then almost manipulate them into clicking your ads. My blog has too much random content to actually get a high page ranking, and as a result it will never really receive the hits. This is “my place” on the internet, and what is say here is as biased or unbiased as I want it to be – it is just my honest thoughts, and there is nothing more to it.

Do some reading up on it some time – passive income is great, but it’s probably the hardest income to earn!

Enough with the grants already!

Australia already has a First Home Owners Grant to “help” people get into one of the most overinflated investment bubbles in the world.  Free money has been handed out to Australians as part of stimulus package, which will cost this country dearly in the future too. Now we have the Holden Owners Grant. Not actually a government grant of any kind, just clever advertising that will no doubt convince thousands of uneducated Australian’s that there’s never been a better time to buy an overpriced, poorly engineered piece of devaluing steel.

Whether it’s a car, a house, computer, clothing, or so on, if people can’t afford it it’s either one of those items that only a special few can afford to buy (which is part of it’s appeal), or quite simply the price is too high. For example, people pay big money for clothing brands like Prada. It’s high prices and label is what makes people aspire to wearing that label. Now obviously Prada are making a profit at their current prices, so their business model works. By selling only to the “elite”, they can turn a decent profit.

On the other end of the spectrum though is the brands that need economies of scale to make their products profitable. Holden is one of these brands. They need the masses to buy their cars, and in order to get the masses to purchase your product it needs to be affordable.

If these items aren’t affordable, quite simply your business is going to fail. Although housing is a tricky one to compare this all with, it’s still a similar situation. People can’t afford to buy houses at it’s current value so there needs to be a grant to get people into the market. All this does is keep the prices inflated and in the long term helps no one except for the “investors” already in the market.

A so called Holden Buyers Grant is just ridiculous. Obviously they can’t move Holdens at the moment at their recommended retail price, so they need the grant to sell their cars. Australians are more likely to buy cars from Asia and Europe as they are either cheaper, or a similar price and of a much higher standard.

For Holden it’s a simple case of provide the market with what they want, or fall down. Unfortunately they and many other Australian businesses fail to see this. In Australia I foresee this crash being harder than any other that we have had in the past, as it is going to be an enormous readjustment for our businesses, and as a result our people.