Five money mistakes to avoid in 2017

By Olivia Maragna

More than half of Australians are resolving to save money this year according to a Galaxy Research study, with nearly 40 per cent of households doing so because they are “struggling a bit financially”.

The bad news is that the most will fall short of achieving their goals and will likely make common money mistakes along the way.

Here are five common money mistakes:

Not having a plan

Without a plan, it certainly makes it hard to achieve goals.

The good news is, that people who explicitly have a plan and set themselves some goals are 10 times more likely to attain their goals than people who don’t. Just putting pen to paper places you in a better position than those who don’t. Better still, tell those around you about them to try and keep you accountable.

Don’t break habits

Denying that you might have a few bad habits is going to hinder your progress. Reflect on 2016 and look at your bad habits. If you don’t break these, what chance have you got? Replace bad habits with good ones and remember that it takes about 66 days to form a new habit so expect the new behaviour to feel like part of your day-to-day life by around the first week of March.

Not understanding your situation

Many people underestimate the cost of their lifestyle and what they spend on a yearly basis.

If you don’t understand this, it is going to make it hard to budget, save and build up investments. Look back on your last year’s expenditure and set up extra discipline around how you operate your bank accounts and how your money works for you. If you are putting a savings plan in place get your employer to do the hard work. Ask them to direct a proportion of your salary directly into a savings or investment account so you don’t even see it in your everyday accounts.

Concentrating only on the short term

While getting your day-to-day affairs in order is smart, ignoring the long term may be detrimental. With changes to the Age Pension starting this month, ensuring your can support yourself in retirement, is vital. Add some extra to your nest egg, whether it be by investing more or topping up your superannuation fund by an extra one or two per cent of your salary. These small amounts will add up in the long run and as an example, $10,000 saved in your early 30s may compound to nearly $60,000 in retirement if invested in a growth environment.

Don’t track

If you have a plan, then make sure you track your progress each month. There are some really simple ways to see if you are on track.

If you have a home loan, investment or savings account, it’s time to look at whether the balances have increased or decreased from the previous month. You will want to see that your loan balances have decreased and your bank balances and investments increased. If balances have gone sideways, it is likely that you need to re-evaluate your budget.

It’s also a good idea to keep a track of the total value of your investments including your super, as these are the investments that are going to provide for you in retirement and replace your existing salary.

With a little bit of time invested at the start of the year, your 2017 may mean a much more prosperous year all round.

This article also appears on the Sydney Morning Herald website