FAMILY MONEY MISTAKES and how to fix them By Jo & Carl Violeta
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ften, people find it hard to know exactly what the next best thing is to do to future-proof their family’s financial situation. Should they invest in shares? Do they get rid of credit cards altogether? How do they build up their savings? We’ve talked to three financial experts who give us their views on the common financial mistakes made by families, and how you can avoid them.
minor adjustments, and this has saved the client’s business over $15,000 a year in tax.
THE ACCOUNTANT
One of the most common mistakes families make when planning their finances is not automating their bills, debt repayments, savings and investments. The consequences? People often end up spending the amounts they had intended to save. This mistake often occurs because they assume that they’re better than they are at controlling emotional spending and sticking to a budget.
Sam Keats is a Chartered Accountant and the Director of Keats Accounting. Mistake: Not keeping proper records It may seem like a hassle but it’s really important to keep copies of all receipts for things work-related, so you can claim them at tax time. You can’t claim without the receipts, and you’ll miss out on money that you're entitled to. You also need to look after your receipts properly. Thermal receipts will fade if exposed to heat, kept near plastic, or if you use a highlighter. Take physical or digital copies to ensure their longevity. Mistake: Not talking to an accountant before making big financial decisions If you’re starting a business, buying an investment property, or buying a big asset like a car, it’s a good idea to talk to your accountant first. You need to make sure that you get the structure right from the start because it might be too late for us to fix it after the fact. For example, last week a client called me about a planned vehicle purchase and we did a review of the documentation, made some 34
Peninsula Kids – Winter 2018
THE FINANCIAL ADVISER Kristopher Meuwisssen is a Financial Adviser at Ability Financial Planning. Mistake: Non-Automation
Avoid this mistake by setting up automated bills, savings and investments that get taken out on payday. This will leave you with the amount that you have budgeted for to spend on whatever you like. Mistake: Not Investing as soon as possible or consistently The consequences of not investing your hard-earned income can be the difference between being able to send your kids to private school (if you choose to), retiring early or not being reliant on the aged pension. By investing early and consistently, your family will receive the benefit of compound interest (growth on growth) and passive income. People often make this mistake because they don’t know where, when or how to invest. However, this is an easy mistake to fix. You can start investing your money very quickly into assets like shares and property. Your family can and should get expert advice when you’re looking to invest so that you can be sure you’re on the right path and that you understand the risks involved.
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