5 ways to ruin your finances

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Despite the answer to nearly any question being available at our fingertips, many of us continue to make really basic financial mistakes.


It's tough to conquer one’s finances, and take control of the future. If it was easy, heck the world would be a very different place. Because we're not there yet, here is a reminder of the most damaging oversights many Australian continue to make and your guide to turning over a new leaf.


1. No Emergency Fund


In the case of an emergency, if you're up to date with your credit card payments chances are you can just charge the expense to your card and pay it off over time. However, if your finances are tight and you've fallen behind with your payments, an unexpected emergency can be just the thing to bring down the house of cards.


One of the most common reasons so many Australians have no emergency savings is because it seems more logical to direct any surplus cash at outstanding debts, rather than having it sit idle in an account. While this is partly true, even if you grow your savings at a snail’s pace, over time this will accumulate and may be very useful in an emergency.


Also, having even just a very small amount of money in savings will improve your chances of receiving additional credit, personal loans or a mortgage further down the track.


2. No insurance (or not enough)


We've all heard horror stories of the huge costs incurred by people who for reasons that may have seemed logical at the time, didn't bother reviewing their various insurance policies. Perhaps you decided to free up more of your income by reducing your home, car or health insurance?


While it's true that you’ll have more cash ̶ there is no greater sink hole for money than paying the full price of repairing your big-ticket items, or yourself!


3. Not writing a will


Although you may have purchased life insurance, if you don't have a will you will leave behind a minefield of problems for your family.


If you have assets, there is no proper reason for not having a will. Many people try to avoid the topic, but as with your insurance policies, your will should be reviewed on an annual basis.


4. Ignoring the cost of using credit


Somewhere along the way, Australians forgot the lessons of our grandparents  ̶  to live within one’s means. While credit card companies survive on the modern trend to purchase now, repay later  ̶  the trend doesn’t account for the long-term costs of paying for items.


The problem is putting everything on credit is leaching money from your future earnings, before you’ve even earned it.


If you think about the cost of an item in terms of how long it took to earn the money to pay for it, the simply equation can be a sobering little sum. We would all go mad if we took this notion to the extreme and bought only the bare essentials, but it’s one sure fire way to take the gloss off any (potentially unnecessary) credit purchase.


5. Buying and selling your shares at the wrong time


Playing the market actually has a lot in common with advertising tricks, and is a game of psychology. All too often people will fall in love with a particular stock, throwing money at it when it’s rising, but bailing out when it falls on hard times.


Before investing, it’s essential you make a strategic plan across a range of scenarios, and remember why you bought it in the first place- to make money.


#1 Tip to Remember


Your financial success is always going to take a few knocks along the way. You can however ensure you take the time to be aware of the most common mistakes and be prepared to take charge.


It is unpleasant to think about what would happen if you were robbed, injured, or how your family would cope if you died suddenly, but by being prepared for these risks is one of your keys to financial freedom.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

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