The world is constantly dangling temptations before our eyes, and it’s never been easier to buy stuff, even if we don’t have the money. The upshot is that we are all susceptible to making some basic financial errors. Individually, these mistakes can be small. Added together, they can really hold us back from financial success.
Take one simple example. It’s easy to spend $15 on lunch from a café. But make your own and you could easily save over $10 per day. Multiply that by your working days and you could be saving over $2,000 a year!
How about the great clothing trap? Every year Australian’s throw away huge amounts of clothing that has never been worn, or only worn a few times. Then there’s food. The average household throws away over $1,000 worth each year.
Add in other impulse purchases and it’s easy to fritter away many thousands of dollars on unnecessary or impulse purchases each year.
Other common (and often bigger) money mistakes arise from our poor use of debt:
For many people, just being aware of these money mistakes is enough for them to avoid the traps. For others, the instant gratification of the purchase or the pleasure in zipping down the road in a flash new car can make it really hard to adopt new habits. But what if there was a clear, long-term reward for suppressing the desire for instant gratification? This is a personal choice, but could be a big overseas trip, upgrading your home or simply achieving financial independence.
Setting some clear goals can make it much easier to forgo that focaccia and flat white in favour of a home made (and just as delicious) sandwich. How many DIY lunches equal a week on a Greek island? Tick them off on a chart so you can visually track your progress.
Or each time you suppress the urge to buy something you desire but really don’t need, give yourself a mental pat on the back. You’ve just brought forward the day when you can buy that new house or work becomes optional. Again, charting your progress can help you see what you’re achieving and help you maintain your motivation.
So have a think about your financial habits, and see how many fit into the basic categories of financial mistakes – spending too much, not saving enough, and making poor use of debt. Then work out the goals that are important enough for you to ditch the bad habits and develop good ones. You might be surprised by just how much some simple changes can contribute to your financial success.
Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.