Episode Details

Enough people have hit their thumb with a hammer for you to know that it hurts quite a lot. You don't need to do the experiment yourself. I've been helping people as a Financial Planner now for almost 18 years, and I've meet many, many wonderful people. Often people put off seeing a financial planner until they're at some sort of cross roads – they've been made redundant, or retirement is rapidly looming, or they've separated from their partner. So prospective new clients often come in to see me with some baggage. Something that's not working, or that they've put off dealing with, and that's why they need our help. Of course over that time you see some common challenges that people face. Issues that repeat again and again. So today I'm going to share some of those with you, the product of my 18 years of helping people, so hopefully you can skip over these common financial mistakes, and reach your goals sooner. We've talked a lot so far in past episodes about strategies you can use to help get you to your goals and dreams. Getting a handle on your cash flow, the Survival and Capital strategy mix in moving to self employment, and things like side hustles. Equally helpful though in getting to whatever goal you've set, has to be avoiding financial mistakes that don't need to be made. Now don't get me wrong, there are some things we have a go at, and they don't quite work out as planned. But we get really valuable learning from them. I think you can often learn a whole lot more from things that don't work out as you'd expected, than when things do just fall into place. But what we're talking about today are mistakes that have been made by people over and over again, and for which you can get the learning without having to repeat the exercise. As I said at the top, enough people have hit their thumb with a hammer for you to know that it hurts quite a lot without you needing to do the experiment yourself. When I started planning for this episode, I wrote down a simple dot point list of the common financial mistakes that I see, and I came up with 12. I'll try to group them together a bit for ease of absorption. Let's start with investing, because several of the most common financial mistakes fall into that broad category. Number one is Procrastination. Not starting. I appreciate this can be a broader life problem, but for now I just want to focus on procrastination in an investment context. Whatever your Financial Autonomy goals are, having some wealth behind you is likely to make it easier to succeed. The stronger your financial position, the more options you're likely to have. Now building up some savings in a bank account is a really great start, and an essential foundation, but at some point those savings need to be put to work. The problem is we fear the unknown, and even more so when the unknown involves money that we've worked really hard to save. But at some point you need to invest. Buy some shares, or Exchange Traded Fund (ETF), or invest in a managed fund. It doesn't need to be enormous amounts to start with, more important is the learning. An element of the initial discussions we have with new clients is to discuss their risk tolerance or risk profile. There is no exact science to this. We have a series of questions we often go through with clients, but sometimes we just have a discussion about their past experiences. The interesting thing is how people's thoughts around risk vary depending on what they've experienced in the past. So for instance I spoke with a client recently who initially told me they were a fairly conservative investor. Now in a Financial Planning context, a text book conservative investor would have somewhere less than half of their investment portfolio in shares and property, and somewhere north of half the portfolio in low risk things like bonds and term deposits. So this guy tells me he's a conservative investor, but we then