KPMG partner Bernard Salt is one of Australia’s best-known experts on the business implications of demographic and social change – and it has given him some deep insights into the way people manage their money.

“I have studied the demographics of rich people and of poor people in Australia and I have come to a startling revelation,” he says. “My startling revelation is this: you will never become rich if you continually spend more money than you earn.”

Salt leads KPMG’s property and demographic advisory group, which helps businesses understand the changing demographics of consumer markets and the workforce by analysing census and publicly-available data to determine trends.

“Demographics has given me an understanding of society’s context. There’s not a lot of people in Australia who earn what I would call ‘good money’. They are so rare that they are not captured by the census – less than one per cent.”

The average full-time adult’s weekly earnings now stands at $1,485.80, a rise of 4.8 per cent from the same time last year, according to the Australian Bureau of Statistics. But while earnings have risen, household debt has skyrocketed in recent years. The ratio of total household debt to assets more than doubled to 19 per cent between September 1990 and September 2008, according to the Reserve Bank of Australia.

It is an issue that has prompted much concern, although savings rates also increased in the wake of the global financial crisis. Salt says he is naturally conservative when it comes to money.

“I was brought up in a Housing Commission home. Having a disadvantaged background makes you aware of the need for, and the security of, money.

“I am uncomfortable with risk – I would never make an entrepreneur or a gambler. My destiny is the comfy middle-class.”

As for those Australians who have made it into the upper echelons of the wealthy, Salt is not one to endorse the all-too-common ‘tall poppy’ syndrome.

“I am often amazed at how some people do not make the connection between what some people have and the effort that has been expended to get there. It’s as if many think that the well-to-do are just born with it. That’s not my observation in Australia. (Perhaps in the UK, but not in Australia.) Generally, people in Australia have money because they work hard, take risks or are very clever – or they have all three.”

The wealthiest 20 per cent of Australian households accounted for 62 per cent of total household net worth (an average net worth of $2.2 million per household) in 2009-10, according to the ABS. By contrast, the poorest 20 per cent of households held just 1 per cent of the net worth of all households (an average net worth of $32,000 per household).

On a personal level, money ultimately means the freedom to continue to do the things that are important, according to Salt.

“Money buys personal freedoms and security,” he says. “I know it’s terribly fashionable to say money doesn’t matter.  It does matter.”

Brendan Swift is a business journalist based in Sydney.