Even though it’s 2017, many people are still not confident in managing their personal finances. Life is getting more and more expensive and unfortunately in the current economic climate salaries sometimes aren’t increasing as much as you would hope.
There are some simple things everyone needs to be doing to create a comfortable financial future for their families but many are still making simple mistakes when it comes to managing their money.
Here are 5 financial mistakes you need to avoid in 2017.
Taking On Too Much Debt
Every loan you take, every purchase you put on your credit card, is increasing your debt levels. At some point, you’re going to take a look at your credit card bill or your outstanding loan payments and wonder how the heck you got there. Before making any purchase, no matter how big or small, ask if you can really afford it as well as if you really need it.
Of course there are some debts that are often unavoidable such as your mortgage or a new car but even here, make sure the level of debt is not going to break you. A reputable financial advisor can help you determine what level of debt is acceptable but also help you design a plan for clearing it as soon as possible.
Not Saving For Retirement Earlier
Retirement can seem like a lifetime away when you’re in your 20s or 30s, but if you aren’t saving for your retirement as soon as you start earning, you’re leaving it too late. The government minimum for employers is all well and good but how do you know if it’s being invested correctly or if it’s going to be enough to match your lifestyle and living expenses in retirement? Speaking to a superannuation advisor who deals with retirement planning is always a good idea.
Not Sticking To A Budget
It’s no good paying your bills and spending your money if you don’t know if your incomings are covering your outgoings. You need to look at what money you have coming in each month, what expenses are going out each month and see if there is a surplus or shortfall. This will help you set a budget for your spending each month and also your saving.
Not Having An Emergency Fund
An emergency fund is so important, even if you have personal insurances in place such as income protection and trauma cover. Some policies take months to pay out or have a 1-3 month waiting period before you can claim. Build up an emergency fund that has enough to cover at least 3-6 months’ worth of essential expenses.
Not Paying Off Your Debts Quickly
Even if you have debts, it’s good to have a plan of when they will be paid off. Many bigger loans will have set terms so you know if you stick to the term the debt will be cleared by a set date. But with things like credit cards, if you don’t pay them off quickly, or worse, just pay the minimum amount each month, you could end up having the debt for a very long time. This means you’ll be paying a lot of unnecessary interest too. If you have multiple debts, it’s often recommended that you pay off the ones with the highest interest rates first and work your way back from there. To make sure you’re clearing the right debts first, we recommend that you speak to a trustworthy financial advisor who can help you come up with a debt management plan that is realistic and works for you.
If you need help managing your finances, speak to us about cash flow management. We specialise in helping you see exactly what your current financial circumstances are and putting a plan in place to help you become financially secure now and in the future. Make an appointment with us online or call us on 08 9300 2553. Our financial advisor in Joondalup is ready to help you today.