Newspaper article The Daily Mercury (Mackay, Australia)

Plug Up Your Cash Leaks

Newspaper article The Daily Mercury (Mackay, Australia)

Plug Up Your Cash Leaks

Article excerpt

EVERY so often it's important to refocus on our financial wellbeing and make sure all the essentials are covered. This is particularly important if you're saving for a deposit on your first home or looking to upgrade or purchase an investment property. One of the most common hurdles for prospective property owners is money. Saving money doesn't have to be a tortuous sacrifice. Remembering that you are taking gradual steps toward achieving something that will be of immense long-term benefit will help you maintain your focus and motivation.

The day-to-day grind of making ends meet can often be a distraction away from the main goal. For most of us, there are some key mistakes to avoid:

Waiting to buy a house

Yes, we can provide a compelling financial reason to rent rather than buy as long as people invest the difference between what they pay in rent and what they would pay in home loan repayments.

The problem is most don't have the discipline to invest the difference and the temptation to spend it gets the better of them. The alternative is to buy a house and make extra loan repayments which increases your equity. In the end it's investing in property and the extra repayments that creates a savings habit.

Leaving superannuation too late

Only 20 per cent of Australians retire when they had planned.

The other 80 per cent have the decision made for them at a time which is usually inconvenient. It could be retrenchment, ill health, permanent disability or other factors.

So it is a high-risk strategy to leave extra superannuation contributions until the last minute because you just might not be given that opportunity.

It's much better to start early and have the discipline of putting away a small amount on a regular basis.

Buying rubbish

Whether it's shares, property, fixed interest or collectables, the key is to buy quality.

So many people are lured in to dodgy investments by the prospect of massive returns.

History tells us that dream rarely happens and it is better to buy quality assets which produce solid, dependable returns over the long term.

Once the quality foundations have been set in your portfolio, then by all means have a flutter on something speculative, but only if you can afford to lose the money if things go sour. …

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