5 money mistakes people make at the start of a new year
by Verve Super
January can raise a lot of feelings when it comes to money and financial planning.
After splashing cash in the silly season, many of us see January as an excuse to make and commit to good money habits. The things you had every intention of doing the year before, but didn’t quite get around to.
When it comes to setting positive habits, knowing the common money mistakes to avoid can be just as powerful as knowing the new ones you want to create.
It’s often the small things that trip us up at the beginning of a new year. Like not making time to create a budget or even think about our money-related goals for the next 12-months, and carrying unsustainable money habits through from one year to the next.
Verve’s Head Financial Coach Zoe Lamont is here to help with a rundown of the five most common money mistakes people make at the start of a new year and how to avoid them.
1. “Don’t delay paying off your credit card, get started with what you can when you can”
Did you pop a few extra treats on your credit card in December? Maybe you delayed paying things off during an interest-free period? However you’ve accumulated dollars on your credit card, January is prime time to clear what’s owed. If you’re unable to pay everything off in one go, the new year is still a great time to set up a payment plan. Consider if you still need the credit card and if not, bin it! If you do, create a list of things you actually need it for. This helps the next time you’re tempted to use it for an unplanned treat.
2. “Quit being driven by the dopamine of spontaneous purchases, set some long-term goals instead”
We’re big on aligning our values with our goals, but not just because it helps us to feel good about where our money is going. It’s also super motivating and a great way to work towards personal savings goals. It can be empowering to use January as a chance to set clear financial goals for the year ahead, with monthly steps to keep yourself on track. Take the time to think about what you’d love to achieve more than anything else this year.
3. “Stop ‘Money Meandering’ and set up a savings and investing plan for your most important goals”
Continuing your financial journey without a plan for another year is a sure-fire way of getting lost. Once your personal goals are in place, you can create a savings plan that makes sense for you. Being realistic with your budget is a must, as this helps you to see what’s achievable in terms of saving. Setting unachievable savings goals can lead to an unnecessary feeling of failure later in the year, so be your biggest supporter in this moment. Money Smart’s budget planner is a handy tool to try if you’re creating a budget for the first time. You can use the planner online or download it to print out or stash on your desktop. Heck, stick it to the fridge and keep your goals front of mind!
4. “Turning a blind eye can lead to long term money stress, start the year with a financial health check instead”
Using a budget planner is an ideal way to start a financial health check, but you can also create a separate list to see the nitty-gritty of it all. Make a list of all your regular outgoings: super, insurances, utilities, and so on. Next, check you’re getting the best deal on everything you’re paying out for. Do you need to change your insurance or set up any new cover? Include any expenses you share with a partner or family, and whether there are subscriptions you no longer need or if there are better deals to be had. Annual health checks are essential but it’s worth setting a six-month reminder to check in on them.
5. “Don’t splurge your way into February!”
If your budget got all out of sorts in December, you’re not alone! Although it’s tempting to keep up the party spirit, your budget will thank you for pulling back. Money challenges – like the 52-week saving challenge or a no-spend challenge – can be a great way to shift your focus in January. These types of savings strategies might not last all year, but they harness our brain’s infatuation with gamification and give us a way to see our savings success in the short term.
This post is published by Verve Superannuation Pty Ltd (ABN 65 628 675 169, AFS Representative No. 001268903), which is a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956, AFSL 238184). Friendly reminder that all the financial information contained in this post is general and doesn’t take into account your personal financial objectives, situation, or needs. It’s important to do your own research and consider getting in touch with a professional adviser to access specific advice tailored to your unique situation.