Whether it’s biting your nails or overindulging, we’re all guilty of having bad habits. But when it comes to bad money habits, there are some you might not even realise you are doing.
To make sure you are on the right track, financial adviser and author of On Your Own Two Feet Helen Baker has shared five common money habits to be aware of and how you can break them.
Also read: Bad habit costing Aussies $8,000
1. Great plans, poor implementation
Maybe you were hoping to save a certain amount of money or finally get into investing in 2023. Whatever your money plans for the year, it’s important to make sure you actually take steps to implement them.
“The best new year’s resolutions and plans count for nothing without action,” Baker said.
“Examine your current situation, expected incomings and outgoings over the year ahead, and adjust your numbers accordingly to make sure they remain fit for purpose.”
2. Harmful cost-cutting
We’re all looking for ways to cut down our costs right now, but be careful not to cut things out you actually need.
“Insurances are a great example. With premiums soaring, many people are cancelling policies,” Baker said.
“However, you can modify insurance cover to find balance between risk and cost. Read the fine print and seek advice first – any change you make should deliver you savings, both now and for the longer term.”
3. DIY everything
When it comes to sorting out your money, doing it yourself may seem like the easier and cheaper option. But Baker said you risked making mistakes and turning DIY into DYI - doing yourself in.
“Don’t take ‘advice’ from people who are unlicenced or those with an agenda, such as ‘finfluencers’ and so-called ‘money experts’,” she said.
“Family and friends may mean well, but unless they are a professional, they’re probably just talking from personal experience, which is different to your own situation.
“As a licenced financial adviser, I can tell you the costs of getting it wrong can be huge. I’ve helped numerous people clean up this mess.”
4. Thinking you won’t be scammed
Don’t overlook the threat of scams and think “it won’t happen to me”, Baker said. Scams are everywhere right now and Aussies have already lost $53 million this year alone. They’re also becoming harder to spot.
“Always be suspicious of digital links, even if they look legitimate. Contact the person or company directly – using details you already have or a Google search – to check its validity,” she said.
Make sure you secure your passwords, such as through creating passphrases instead of single words. It’s also worth setting up multi-factor authentication for your bank and accounting apps, Baker said, and checking your bank statements regularly for anything suspicious.
5. Getting caught in the past
Thinking things like investments and the housing market would be the same as last year could be another dangerous trap, Baker said.
“The best-performing superannuation fund in 2022 will unlikely be the best again this year. So, don’t erode your super by swapping funds to one that performed better last year without having a proper strategy in place,” Baker said.