When it comes to money, I believe that knowledge is power, and ignorance is most definitely not bliss. But it’s a lesson I’ve learned the hard way – as a money expert I’ve made some pretty big financial mistakes.
To be fair to past me, most of them were before I knew what I know now about money. But therein lies the problem – younger people with little financial knowledge have the capacity to make some very big mistakes, which have the potential to echo through their entire lives.
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Here are my three biggest money mistakes.
1. I failed to pay attention to my super when it mattered most.
Thanks to the power of compound interest, the money in your super account in your 20s and 30s has the potential to grow the most. So, making additional super contributions at this stage of life is really important – something that’s especially true if you think that having kids could be in your future plans. Unfortunately, I didn’t do this.
In my early 20s, I had multiple super accounts from teenage jobs and was paying fees on them all. After finally consolidating my super into one account I moved overseas for five years, where no employer was obligated to set aside money for my retirement – and I didn’t either. Next, I had kids and took a career break, and my super continued to accumulate cobwebs.
When I eventually returned to work, it was as a freelancer, so again I had no employer making super contributions for me, and I didn’t make any either.
It wasn’t until I was closing in on 40 and was writing articles to educate other people about their finances that I took a close look at my super – and panicked. Since then, I’ve been doing my best to boost it at every opportunity, but, to be honest, it’s not looking quite as healthy as it should for my age.
2. I failed to consider the financial trade-offs of having kids.
I’m an all-in kind of gal, so when my first child was born in 2007, I was besotted. My previously ambitious, career-minded self flew out the window.
I was lucky enough to have a partner who could support us financially, so I resigned from my job and went all-in as a stay-at-home mum. But what didn’t occur to me was that just because I could afford to quit my job, it didn’t mean I should.
I didn’t think about the long-term financial implications of my decision such as what would happen to my career and earnings capacity if I was out of the workforce for several years? What would happen to my super and ability to enjoy a comfortable retirement? And just because we could survive on one income at that point in time, what impact would doing so have on our finances, long-term?