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This Halloween, consider how your spending today might impact your future.
The spooky season of spending is upon us.
As the holidays draw ever closer, the horrors of high price tags and higher debts lurk just around the corner. This is the time of the year we need to be thinking about what we’re doing with our money. Consider how you handle your money now and what you’ll need in the future to avoid skeletons in your closets and ghosts of spending past.
Understand how your decisions and actions today may affect your financial security tomorrow. Get in touch.
Here are six ghastly money mistakes to avoid in your late 20s.
1. Letting your super sit idle
Financial stress can be a real killer, especially when you can’t work.
If life was a slasher film, would you wait until the last minute to arm yourself against the villain? Financial stress can be a real killer, especially when you can’t work. That’s why focusing on building your super as early as possible is crucial.
The good news is that more millennials than ever are growing their supers. The average balance of 30-34 year olds in 2015-16 grew by 20 per cent for men and 32 per cent for women in two years, according to the Association of Superannuation Funds of Australia (ASFA). You can prepare yourself against a stressful retirement by taking the time now to ensure you’re making the most of your contribution allowances. At the very least, making a voluntary salary sacrifice to your super can be a tax-effective way to grow it.
2. Living paycheque to paycheque
How often are you finding yourself scraping the bottom of the barrel by the end of each pay cycle? UBank research from 2017 indicates that one in every three Australians are penniless by payday, with the promise of short-term happiness acting as a frequent distraction from savings goals. Giving in to FOMO and spending beyond your means builds unhealthy habits – ones that can hold you back from achieving your big-picture goals.
Your 20s are full of potential money mistakes lurking in the woods.
3. Not keeping emergency savings
A survey commissioned by start-up investment app Acorns showed that the need for an emergency savings fund triples between the age brackets of 18-24 and 35-39. As you grow older and take on more responsibilities, more is at stake should you be unable to cover unexpected costs. Getting the jump on sudden financial scares by building an emergency fund of at least $2,000. This can be as simple as putting aside $20 a week for the next two years.
4. Hurting your credit score
It’s easy to not care about your credit score when you’re young. However, when you start considering your future goals such as buying a house or starting a business, credit becomes king. Your score is used to determine whether or not lenders will allow you to take out a loan, so it’s vital you do your best to look after your score and save yourself years of trying to improve it.
This means you need to:
Avoid applying for too many credit cards or loans in a short period.
Pay your bills on time, every time.
Resist maxing out your credit card.
Consider loans for large purchases, rather than using a credit card.
Never default on a loan.
5. Being complacent about your salary
Staying ahead of the rising cost of living and always ensuring you earn a fair salary is critical to keeping out of debt.
Sometimes it can feel like there’s nothing scarier than asking for a raise – but it’s time to face your fears. According to Melbourne Institute professor Mark Wooden, one of Australia’s leading labour market economists, wage growth in the country is keeping up with living costs – but that’s not as good as it sounds. With productivity rising significantly, workers are producing more every hour but aren’t seeing wage increases to match.
Staying ahead of the rising cost of living and always ensuring you earn a fair salary is critical to keeping out of debt.
6. Refusing to plan
Hope keeps us going through the toughest of times. Here in Australia, we thrive off hoping for what the future will bring. But three in four Australians aren’t building comprehensive financial plans to achieve their goals, according to the Financial Planning Association of Australia.
Lack of planning is a major roadblock to achieving your dreams. Building at least a five-year plan can help you see where you’re headed and ensure you stay on track.
Getting ahead of the trend and growing your wealth for a comfortable life requires financial literacy and a solid plan.
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
