Mistakes are a normal part of life but financial mistakes can be expensive, financially and emotionally - bringing about feelings of regret and a lack of control over your own future. And while mistakes can be a wake-up call to change your life, here four common financial mistakes you’ll want to avoid.
1. Leaving the finances to your partner
Ever heard the saying ‘A man is not a financial plan?’ In fact the sentiment applies to both sexes. Taking control of your own personal financial destiny is crucial, particularly for Australian women who face a superannuation crisis due to the gender pay gap and less time in the workforce on average. And given our 1 in 3 divorce rate, pinning your financial future on your spouse could be a recipe for disaster if you find yourself funding your lifestyle alone.
2. Not making the most of what you’ve got
Successful professionals often spend years focussed on building their careers before taking stock and creating an investment plan for the future, while all that time gradual increases in income could have been boosting their super or investments to ensure they can afford the lifestyle they love long into the future.
3. Thinking the unexpected won’t happen to you
Hundreds of thousands of Australians suffer cancer, heart disease, a heart attack or stroke every year and the funny thing is, while most of us know someone who has experienced the thunderbolt of serious illness, accident or injury, we still think it won’t happen to us. Sure, most of us have some cover in our Super fund, but it’s rarely enough and there are often waiting periods and limits on how long the policy will pay out. The right insurance plays a huge role in protecting what we work so hard for. Most of us wouldn’t dream of leaving our house or car uninsured but many leave their entire income to chance.
Insurance like Life cover, Income Protection and TPD (trauma) cover is both complicated and tedious so professional advice is a must. Particularly if you have kids who are dependent on your income or you have high levels of debt, such as during the early years of business ownership. The same goes for having a valid Will in place and letting family members know it whereabouts.
Don’t put this important stuff in the too-hard basket, outsource it to an expert instead.
4. Assuming you don't have 'enough money' to need advice
Earning potential through our primary income is the greatest asset most of will have over a lifetime, so it makes sense to grow it, protect it and make the most of it to achieve our life goals. As Australia and the rest of the world continues its economic and demographic transformation, more things will be less certain: house prices, buying vs. renting, the type and frequency of work we'll do, the impacts of globalisation and technology on markets, where to invest and ongoing changes to tax, superannuation and pensions. Against this backdrop anyone earning a good professional salary would benefit from advice to maximise their financial position over time.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.