'I’ve helped hundreds fix their finances. Here are 3 money traps to avoid in 2022.'

Was this meant to be the year? The year you finally figure out what you’re doing with your money (and why you don’t have more)...?

Well, it’s definitely not too late. 

See, a few years ago, I started a financial education platform to help people get on top of their finances. Today, hundreds of our students have done a complete 180 on their financial lives through SkilledSmart’s Mastering Money program.

Every year, I witness many of our students turn their lives around in just a few months. I’ve seen students go from being broke to saving tens of thousands of dollars; go from terrified of investing to becoming a confident investor; and achieve goals they never thought possible. 

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But I also see plenty of people stuck with the same financial problems year after year, making no progress and running in circles.

So, how can you make real progress this year? Well, here are three money traps to avoid:

1. Hopping into high-risk investments as a total beginner. 

Imagine you’re about to drive a car for the first time and you have two options. 

You can go to the racetracks, get into a sports car, try to keep up with the others going at over 150km/h and hope you don’t die. 

Or you can jump in your mum’s beat-up Toyota and take it for a 40km/h drive down the quiet streets in your neighbourhood. 


The second option is less exciting. But you’re also less likely to get into serious trouble. 

It’s the same thing with investing. 

Right now, crypto and NFTs are all the rage. Every day there’s a new article about someone who made a life-changing amount of money, quit their job, and is living the dream life. 

But don’t be fooled. Crypto and NFTs are a higher-risk investment. If you’re a beginner investor, this is like signing up to drive a high-speed sports car as an L-plater. 

If you have credit card debt, if you can’t save money consistently or live paycheque to paycheque, if you don’t have an emergency fund, if you don’t have a basic understanding of how investing works… don’t start with crypto and NFTs. 

You should only enter investments from a position of strength and stability (not struggle or desperation). Once you build a strong financial foundation, you can afford to experiment with higher-risk investments without the risk of it wiping you out. 

For example, one of our students, Sara, does have some crypto investments today, but it didn’t happen overnight. She did the work to put herself in a position where she could do that. 

A few years ago, she was living paycheque to paycheque, no savings, no idea how to invest. Through our Mastering Money program, she first learned to stabilise her cash flow, stop living paycheque to paycheque, pay off her debt, build up her savings, and learn the basics of investing. 

After all that was in place, with the foundation she was able to build, she then felt confident and secure in being able to add a few higher-risk investments to her portfolio. 


Start from where you are today (instead of where you wish you were) and take one step at a time. 

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2. Thinking you’re doing okay because you earn and save good money. 

Most people think the recipe for financial success is: get a well-paying job, save as much as you can, and buy a house. But there's more to it. 

There isn’t a single metric for financial success but here’s one question to think about: if you stopped working, how long could you survive on your cash and investments? 

See, most people will eventually want the option of not working for money. 

Maybe you want to work part-time, or you want to take up unpaid work. Maybe you want to take on consulting projects and only work half the year. 

Your ability to make that choice largely depends on your financial situation. If you stopped working, where would you get the money to pay for your living expenses? 

For most people, the answer is going to be: their investments. Your investments are what will enable you to stop or reduce how much you need to work. 

That’s the reason we have superannuation in Australia: it’s a form of ‘forced’ investing so that when you retire, you can live off your investments. 

But superannuation may not be enough to retire on and you may want to stop working before the law allows you to access super.

That’s why it’s important to build up your investments outside of superannuation as well. 

So, if you’re happy with what you’re earning and saving, great. 


But don’t stop there. The next step is to learn how to invest so you can grow your investment portfolio to create more flexibility and freedom for yourself. 

3. Thinking you have ‘heaps of time’ and the year is ‘just getting started.’

Isn’t this the mistake we all make?

We spend the first half of the year thinking we have plenty of time. Then we spend the second half of the year thinking “where did the year go?!”

So, this is your wake-up call. 

Your goals aren’t somehow going to get easier to accomplish as the year progresses. Getting debt-free, saving more money, starting to invest… it’ll be just as hard then, as it feels now. 

Actually, it usually feels harder as time goes on. 

Life happens, work gets busy, unexpected events come up. There is a non-stop stream of reasons we use to push back and tell ourselves that right now is “not the right time”. 

So, what if you switched things up this year?

What if you accomplished your goals even sooner than you thought possible? Instead of it taking all year, what if you hit your goals by July this year?

Wouldn’t that be so freeing? 

You’d have the rest of the year to celebrate instead of feeling the weight of regret for not having started sooner or done more. 

Paridhi Jain is the founder of SkilledSmart, an independent financial education platform helping adults learn to save and invest their money. For more money tips, you can grab a free e-book on “5 Money Mistakes Costing You Thousands” via their  website, and follow them on Instagram.

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