What kind of saver are you? Almost half of Australians have no clear strategy when it comes to their finances according to the Australian Securities & Investments Commission. A few wrong moves and you could end up in trouble. That’s why it is crucial to ensure you create a financial plan.

Here are four money mistakes to avoid:

 

#1 Spending more than you earn

The secret to achieving your financial goals is to save a realistic amount of money regularly. The key is to always spend less than you earn. For example, if you are saving for your first home, then make this goal a priority. Create a savings plan to ensure you are moving towards your goal. Get your partner or family on board to ensure you’re all moving in the same positive direction.

Instead of spending money on work lunches then prepare healthy home meals to take into work. Go on the ‘cheap night’ to the movies and take your own snacks. Of course, you should still make sure you have a great social life and meet up with friends regularly. Why not take advantage of free and fun events in your local area, or invite them over for a movie night or dinner party at home.

 

#2 No budget

Sticking to a budget is the best way to take control of your finances. Ensure you’re aware of all incoming and outgoing money. Go ‘old school’ and write in your paper diary every day or take advantage of spreadsheets online or a budget app so you can spend a few minutes a week tracking both your spending and expenses.

Staying on top of bills is imperative. After all, who wants to waste money paying unnecessary late fees? As long as you’re sure you’ll have enough in the bank to set up automatic payments then this is a great option. Then you can just ‘set and forget’. If you have more than one bank account, then make sure you have all bills outgoing from your main bank account so you never get caught short.

It’s a great idea to put aside 30 minutes or so a month to evaluate your monthly expenses. This will let you know how much closer you are getting to a savings goal such as being able to set a date and actually book that overseas holiday or buying a new car.

 

#3 Avoiding paying insurance

Remember, it is important to protect both you and your assets with the right kind of insurance. You just never know when something might happen to you or someone you love – from unexpectedly losing your income, to a health or home incident or even a natural disaster.

Do some research and decide on the right insurance to protect you and your family. It’s worth spending time investigating to make sure you aren’t wasting money on unnecessary insurance and alternatively, ensuring you are covered for necessary areas.

 

#4 Living in debt

Credit card debt is suffocating. All it can take is some serious retail therapy, a few expensive dinners or a holiday bought on credit and before you know it the minimum credit card payment alone can take a chunk out of your income. However, help is available.

Do whatever you can to lower your expenses. Such as:

  • Move to a cheaper home
  • Trade in your car for a cheaper model
  • Holiday at home this year
  • Buy in bulk and eat at home
  • Walk instead of driving or getting public transport
  • Speak with your bank to see if you can negotiate a better interest rate
  • Or consider swapping credit cards and shifting your debt to take advantage of an interest free period with a new card. Banks regularly offer special deals such as six-months free credit so keep an eye out and don’t be afraid to ask for help.

If you opt for this route, then ensure you stop spending unnecessarily and make a concerted effort to save during the interest free period. Then be ready to pay off a set amount of your debt when it ends and finally get yourself off the credit card merry-go-round. Instruct your bank to lower the amount you can borrow so you aren’t tempted again or consider just paying in cash until you train yourself to be good with money.