The biggest money mistakes you can make
Our 20s and early 30s is the time we become independent: schools in the rear-view mirror, we’re finally earning ok money and we want to live our best life. We’ve been taught the basics about managing our finances, so what could go wrong?
Key learnings covered in this topic
- Money mistakes to avoid
- Planning ahead with your finances
- Financial advice available to you
Mistake 1 – Spending a pay rise. As you get more confident in your career it’s likely your salary will grow. This is one of the best opportunities you’ll have to set yourself up financially. If the necessities are covered, why fall into the trap of upping your spending? Instead, you could take a percentage of the extra cash and squirrel it away for a rainy day. Your future you will be thankful.
Mistake 2 – Buying a new car. That new car feel is hard to beat until you realise that as soon as you drive it out of the dealership, you lose thousands of dollars. If you need some new wheels, consider a car that’s a few years old with low kilometres. And if the new car smell is non-negotiable, it’s time to shop for air fresheners.
Mistake 3 – Not paying bills. It’s easy enough to rack up a hefty credit card balance or winter electricity bill, but if your debt spirals out of control you should deal with this as soon as possible. Not paying your bills on time could leave a black mark on your credit rating which can have a lasting effect on your future self, including paying more for insurance, and being declined for loans.
Mistake 4 – Relationship debt is when you break up and become responsible for your partner’s debt. In the early days of a relationship, it’s a good idea to chat about your financial goals and your attitude towards money. And when you do live together set up the utility bills in both names, don’t allow a secondary card on your bank account, and go into any joint loans with your eyes wide open.
Mistake 5 – Forgetting 11% of your money. You’d notice if a chunk of your take home pay was missing, so why forget about your super? Giving your super the right attention when you’re young can really make a big difference to the future you.
Are you invested in a high growth option? Your super savings will be invested for many years to come, so you can possibly take more investment risk as you have the time to ride out the highs and lows of the market.
Are you putting in a bit extra? The super contributions you make when you’re young are far more valuable than the ones you make closer to retirement due to a wonderful thing called compound interest.
Giving us a call is never a mistake
If you need some help with you super, please give us a call. As part of your membership, you can chat to a financial planner (at no extra cost)* about the best investment option to suit your age and circumstances, how to build your balance and the impact on your take home pay by contributing a bit extra.
*Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766.