Pop Quiz… how many of the following financial habits can you relate to?

As you read through think about how it might apply to your own situation and if so, what could you do about it? The best thing you can do is add it to your TO DO LIST and GET IT DONE. Spending a little time in the quieter Summer months will mean you are setting up your year with a great start.

Do some reading, allocate some time and your 2016 will love you for it!

1. Making excuses

“I’m too busy with the kids, too busy with work, too busy building a business, family, parents, social life, to look and at my financials.” Yes you are busy, but life is busy these days and so when will a good time be? By not taking the time to see where your basics are and what can be done about them you can actually be out of pocket at retirement by thousands and thousands or not being in a position to buy your home or setting up the business properly so you don’t spend the first few years chasing your tail. Get some books (there are some really great ones out there), do a short course or go and see a financial planner to get help where you need it. It’s easier than you think.

2. It doesn’t matter what super fund I am in

You’ve joined a new job and when asked to complete your paperwork for your TFN, bank details and super fund you do the minimum and tell HR just put me in whatever super fund is the default fund. Where you are in life should be influencing how your super is invested, not your employer! You do have a choice of super fund. Just a 2% return difference on your super fund can mean the difference between enjoying retirement or not, due to it being such a long term investment. By ignoring not only which super fund you are in, but also how it’s invested is a very costly mistake.

3. I don’t want to pay for any more insurance

You’ve insured your $20,000 car, your contents and your house but haven’t even addressed what would happen if you were no longer able to work.. If you are 21 and earn $40,000 with a 3% increase each year (on average) you will earn over $3.5m over throughout your lifetime. If someone gave you a $3.5m house or car, I can assure you that you would get insurance for it. The younger insurance is taken out, the cheaper it can be over the long term and with no existing health condition, no exclusions will apply either, so you will be covered for all scenarios. By waiting until you do need it will probably mean you can’t take it out!

4. No idea of what I am spending

You have no responsibilities and enjoy the feeling of spending! Buying what we want, eating out frequently, nice wines, new outfits for events, but what happens when we get a bit older and we wonder where it has all gone? You know where it has gone but you choose to continue on. While budgets can be seen as a “dirty” word, they do serve a purpose- financial stability. You can do them as simply or as complicated as you like but start by listing down all your expenses for the month/quarter. You can also allocate money to going out, clothes, gifts (even if they are to yourself). This will give you an idea of what expenses can be cut back, so you can start a savings plan- even $20 a week is a good start!

5. Needs vs Wants

“I really need this now though… What if it doesn’t go on sale? What else am I going to wear? Eat? Drive? Watch?” While it can seem a little boring to wait for a sale, or even better, a “spend and save offer” from your favourite shop, it can save you plenty. By never saying no to ourselves, or better still, making “sound justifications” for our snap purchasing, we find ourselves not appreciating our things, and even living with buyer’s remorse! Set yourself a limit, and anything that costs more than that, see if you can find it cheaper online, can it wait for a sale or the most important question… will my life go on without it? Yes? It’s probably a want and not a need then.

6. No Plan

“How can I plan for my future when I have no money now, therefore I can’t even think about what I financially want to achieve down the track?” Your financial goals can be decided and adjusted just as you would set personal and career goals for yourself. As the old saying goes… “a goal without a plan, is just a wish”.

7. Not seeking financial advice

“The whole process of financial advice is too complicated and stuffy and I can’t afford it”. How many financial planners have you taken the time to look at? When you are looking for a new doctor, gym, naturopath, you ask your friends and family, look at your local area and do some googling. Once you visit them for the first time, you decide how comfortable you are with them based on their manner, experience, costs, specialities etc. It’s exactly the same for financial planners, so start asking around, googling and ringing so that your future self will be thankful.

So how did you go? Did you answer yes to one, a couple, all of them? They are pretty easy things to take care of and with a little reading, time and if required, advice, you will be on top of all your financials and your future security! What an amazing way to start the year!

About the author

Penny Collicoat

Director at Women with Edge | Website | + posts

Penny Collicoat is Director of Women with Edge – a Financial Planning Business focusing on securing women’s financial futures www.womenwithedge.com.au

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