Financial laziness will cost you money
If there’s one thing I’ve learnt in my years blogging about money, it’s that financial laziness will cost you $$$ big time. It’s really up to you to become engaged and empower yourself with a little bit of financial education.
Let’s start with a good news story
Recently I got a message from a friend of mine who over the years has become increasingly engaged in her financial education. She’d recently changed jobs from one where her employer was paying much more than the government mandated 9.5% superannuation to one that wasn’t. She was curious about the idea of salary sacrificing extra money into her super.
Do you know what I loved about receiving this message? It showed that my friend had thought about her financial situation and was taking an active step to do something for her future self. We spend so much of our time thinking about a lot of things that affect our future – our next holiday, next boyfriend, but our personal finances? Not so much.
Why understanding your finances matters
You’ve probably heard plenty about the Banking Royal Commission. What did it uncover? Banks are profit driven, unscrupulous little buggers who get up to all sorts of dodgy activities. Will it change? Maybe, maybe not.
I’m not going to lie, the findings of the Commission were not a surprise to me in the least. What’s unfortunate though is that the general level of financial literacy in this country is low. And it’s because of this that financial institutions like banks have been able to get away with misleading and exploiting consumers.
What have we learnt?
Long story short – understanding your finances is on you. It’s a big ask considering most of us never received a USEFUL financial education at school (high school maths does not teach financial literacy). And while education is a problem, so is engagement.
The amount of inertia that exists around money and personal finance honestly makes me despair. But I do understand. Why would you learn something you’re not interested in? I mean, I sure as hell don’t want to spend my free time understanding the chemistry of turning my ginger tresses blonde. But then again, most hairdressers want me to leave their salon looking and feeling great. They aren’t really out to squeeze as much $$$ as they can out of me by playing on my ignorance.
What can you do?
What I’m saying is, if you want to be in a sound financial situation – you need to stop with the financial laziness and educate yourself. Getting a mortgage or saving for retirement is a huge deal. Your house and your super are likely the two biggest financial assets you will have in your life. Isn’t it worth understanding how to maximise the ways in which you pay for them?
Now, it’s easy for me to say you need to get educated. What you probably want to know is… how?
First, read this blog (blatant plug, but you’re already here anyway so you might as well look around). Second, ask yourself the following questions:
What is the interest rate on your savings account? Is that a competitive rate?
If you have a credit card, what is the interest rate?
When is your credit card payment due?
What is compound interest and how can you make it work in your favour?
Who is your super with?
What kind of fees is your super fund charging you?
What are you invested in within your super? Is it the right level of risk for your age?
If you have a mortgage, what is the interest rate? Is that a competitive rate?
It sounds like a lot, but if you tackle just one thing at a time, you’ll educate yourself AND put yourself in a better long-term financial position.