Regardless of your financial situation, you’ve probably made one of these mistakes at some stage in your life. This article discusses the common financial mistakes made by students, new workers, singles, couples, DINK’s (Dual Income No Kids), families and divorcees and also how to avoid making these mistakes. These are the major risk points in our lives so it is very important to avoid these mistakes because of the setbacks they can cause.
The biggest mistake students can make is deferring a large portion of their debt. This is tempting to do because of how difficult it is to study full time and work. However students should avoid as much debt as they can.
If students find it tough to save and feel like they have to defer their debt, they should work full time for a year and either defer their study or study part time. This will help create a savings gap and reduce your debt at the end of your studies.
People when they get their first job tend to spend now and save later, but this is a pattern that is risky and tough to get out of. This is risky because you can work hard for years and have very little to show for it.
To avoid this mistake, the moment you start working you should automatically transfer a percentage of your pay to a savings account that you can’t access. This allows you to save whilst leaving you money to also enjoy life.
Waiting to meet a future partner before building a financial plan is a common mistake made by singles. All singles should have a financial plan and build their own assets.
You should consider taking in a boarder until you can manage a mortgage on your own. Another option is buying an investment property in your own name and renting it out.
A mistake made by couple is not thinking about protecting themselves financially. This is generally because you are feeling emotionally secure, however the number one reason couples fight is money.
Couples need to talk about money openly. They should also insist on transparency and understand the ramifications of any financial product they buy and what it could mean financially for them. Financial product can vary from a phone, right through to a house.
Dual Income No Kids (DINK’s)
Because DINK’s tend to have a higher disposable income, they run the risk of spending too much as opposed to saving.
Yes it is important to enjoy life, however you should also understand your goals, priorities and values so that you are more motivated to save and not as tempted to spend when you don’t have to.
The biggest risk parents’ face is trying to keep up with others. It can be tough to keep up with friends who spend more on their child than what you can afford on things such as private school education or the newest toys and gadgets.
You shouldn’t feel the pressure to keep up with others and understand that getting yourself into trouble financially now could result in added pressures later.
During a divorce or separation both parties can be emotional and risk things getting messy. In this situation the biggest winners or normally the lawyers involved.
If you are in this situation you should seek good advice early and try to agree early on a fair and equitable split. This allows you to start again with more dollars in your pocket as opposed to a lawyers pocket if things get messy.
Source: Debra Killalea, news.com.au
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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.