The biggest money mistake

When I think about personal finance, I think most people can admit to making plenty of financial mistakes throughout their life:

• Constantly holding credit card debt

• Going to work every day for a year, just to pay for their car

• Failing to live within one’s means

• Failure to invest for the future

• Failure to take advantage of compounding

There are those that never start investing, never contribute more to super, those that assume the government will take care of them in retirement.

While we are all susceptible to mistakes, I think the biggest financial mistake is that most people don’t take the time to become educated about how money works.

When just an extra hundred dollars invested consistently, regularly and tax effectively over the course of one’s life can make a huge difference in retirement, why don’t more people do it?

My guess is most people aren’t even aware of the impact long-term and consistent investing can have.

Let’s face it - school doesn’t teach shit about money.

I did learn a lot about algebra and long division though that comes in handy on a daily basis...

Here’s a cold hard truth…At High School I studied accounting, economics and maths, and I still had no idea how to do a tax return or how to invest properly when I graduated.

My Uni education didn’t teach me much more. Sure I learnt how the tax system works and how companies report their finances, but personal financial education…it didn’t really exist.

Sometimes I wonder if this is a deliberate ploy by our leaders to keep everyone employed and paying the highest levels of tax…keeping people on the hamster wheel indefinitely.

It wasn’t until later in life that I undertook a basic Diploma of Financial Planning that things started to click for me.

But even then, they don’t teach you things such as:

• Index funds are one of the most beneficial and productive ways to build wealth for the majority of people. (They don’t teach you this because you can’t charge large fees by putting people into index funds)
  

• Your car is not an asset
  

• That most stockbrokers fail to outperform the market. (Not good for business that one)
  

• Reduce your spending and live modestly
  

• Pay yourself first

While I’m proud to say that many of the financial principles espoused in this blog came naturally to me, the truth is, it can be difficult to know where to look for good advice.

Many look to their parents for advice, or listen way too enthusiastically to the guy at the BBQ offering free advice. There’s a reason the guy at the BBQ is giving advice for free….no one would pay for it.

I believe we are entering a phase where more information is publicly available than ever before. This is great because people can take the time to become more educated.

This blog is, in my small way, my attempt to help people boost their financial education. The goal is to, over time, create a blog that can be considered “Advanced Personal Finance”.

To this point of the blog, we have been discussing mostly personal financial principles…the financial principles required to build a strong financial foundation.

I believe these principles will put you in good steed, but it’s time to get more advanced, more technical, more detailed.

This is where I hope to differentiate my blog from others, by providing more advanced financial material.

So come on in, enjoy the ride, I’m here for the long-haul, I hope you are too.