5 money mistakes you don't want to make this year

Hey, we’re almost wrapping up the second quarter of 2024! If you’re feeling the pinch from the cost of living crisis, it might be time for a budget reset. Taking charge of your finances can do wonders for your wellbeing—money worries are linked to stress and even depression. 

To help you out, we’ve got some solid advice from Glen James, the brains behind the 'This is Money' podcast and a former financial adviser. Glen’s breaking down the top five money mistakes you need to avoid in 2024 and what to do instead. 

1. Money habits: what to keep and what to ditch 

Whether you’re planning winter getaways or just navigating the everyday expenses, now’s the time to take a good, hard look at your money habits. 

Glen suggests doing a financial audit to see what’s been working for you and what’s been dragging you down. “We’re all humans, and bad habits have a sneaky way of creeping in. Look back at the last 12 months and figure out what worked for you—and more importantly, what didn’t,” Glen says. 

Let’s say you’ve been relying on Buy Now, Pay Later schemes. They might feel like a quick fix, but are they really helping you reach your financial goals? Glen breaks it down: “It’s a circular thing where you use it, clear it, use it again, pay it back. So, ask yourself, ‘Does it feel like I’m making progress with this?’”

The next step is straightforward—keep doing what’s been working and ditch the stuff that hasn’t. It’s all about making small changes now to avoid bigger regrets later.

2. Future-proofing your finances 

What do you want the end of 2024 to look like? It’s not just about vague wishes but really picturing your year-end financial landscape. 

Glen says, “Get a clear view of what you actually want out of your money and life by the end of the year, and then work backwards to set up a system to get there."

Striking a balance between enjoying the present and planning for the future is key. Think about the little things you can do today that your future self will thank you for. Maybe it’s adding a bit more to your superannuation or finally starting that savings account for a dream trip. 

So, as you enjoy the autumn leaves and start layering up, take some time to plan ahead. What steps can you take now to ensure you’re on track for a financially sound and satisfying end to 2024?  

For tips on how to supercharge your super, check out this article.

3. Be intentional with your money 

Glen recommends putting your goals and values at the heart of all your financial decisions. “We really want to start having a value-based budget and a value-based spending system, which means we are putting what we actually value first,” he says. 

Think about what truly matters to you. Maybe you’re saving for a summer road trip up the coast, or you’re dreaming of upgrading your tech for a smoother work-from-home experience. By being intentional and prioritising these goals, you’ll naturally start cutting back on less important expenses, like those weekly takeaway dinners or impulse buys. 

Glen emphasises the importance of distinguishing between wants and needs. “Let’s stop confusing luxuries for things that we think are basic necessities,” he says. For instance, some people claim they can't afford rent but dine out five times a week. Understanding your spending priorities versus luxuries is key to a healthier financial outlook. 

Remember, what’s essential for you might seem like a luxury to someone else. If hitting the gym or getting your hair done monthly is your thing, embrace it. Glen suggests setting up separate accounts dedicated to these priorities. “Don’t feel guilty about it. It’s okay to have a bank account set up specifically for ‘your thing’,” he says. 

So, as you plan your next adventure or simply enjoy the seasonal changes, take a moment to align your spending with what you truly value. It’s all about making your money work for you and living your best life. 

4. Why strict budgets don’t always cut it 

Glen has a fresh take on budgeting: ditch the restrictive approach and embrace a value-based spending plan.

“The reason I’m a proponent of a spending plan is it’s more than just allocating X amount per week to a fixed account,” Glen says. A strict budget might look good on paper, but life happens—especially here in Australia, where one week you might be splurging on groceries for a big family barbecue, and the next, you’re cutting back to save for a weekend getaway.

Glen’s approach is all about flexibility. “Sometimes when we go grocery shopping, guess what? We spend a bit more, and that’s OK,” he explains. The idea is simple: if you end up spending more on groceries this week, just balance it out by skipping that café lunch tomorrow. It’s about making real-time adjustments that fit your lifestyle. 

Think about it—do you really want to be stuck in a rigid budget that doesn’t account for the unexpected? Maybe your mates surprise you with tickets to a footy game, or you find an unmissable deal on that jacket you've had your eye on. A value-based spending plan allows you to enjoy these moments without the guilt.   

As we move deeper into 2024, let’s focus on spending plans that work with our lives, not against them. It’s all about balance and ensuring our budgets reflect what we truly value, whether it’s spontaneous adventures or simple pleasures at home. So, take a look at your spending and see where you can inject a bit more flexibility—it might just be the key to a happier, more manageable financial year. 

5. Get your financial foundations right 

Glen highlights that neglecting fundamental financial principles can really mess with your economic wellbeing.

Think about it: while you’re planning your weekends around footy games or that upcoming winter festival, don’t forget to prioritise these crucial money habits:   

• Paying off debt: Before splurging on that new winter coat, make sure your credit card balance isn’t giving you frostbite. Clearing debt is like getting rid of those extra layers—you’ll feel lighter and freer. 

• Starting an emergency fund: Life’s unpredictable. Whether it's a sudden car repair or an unexpected vet bill, having a stash of cash ready can keep you from scrambling. Aim for at least three-six months’ worth of living expenses tucked away. 

• Building up savings: Beyond just the rainy day fund, think about saving for your bigger dreams—maybe a summer holiday or that house deposit. Little by little, it adds up. 

• Investing regularly: Look at investment options that fit your lifestyle. Even small, regular contributions can grow significantly over time.  

• Improving your financial literacy: Understanding your finances doesn’t have to be a drag. Podcasts, blogs, and even social media are packed with resources to help you get a grip on your money game. 

• Sorting your personal protection plan: When it comes to protecting your finances, having a solid personal protection plan is crucial. If you're healthy and have an insurable occupation but still hesitant about insuring your income, let’s put it in perspective: would you uninsure your car? Not likely. By not insuring your income, you’re essentially taking on a $50,000 or $60,000 (or potentially much greater) risk, while your car insurance covers a $20,000 vehicle damage risk. 

A personal protection plan is essential because it ensures you factor the cost of this protection into your spending plan. This means you’re not only safeguarding your income but also ensuring that money continues to flow in, even when the unexpected happens.  

In the event of unforeseen circumstances, having your income protected can make all the difference.

Check this out for everything you need to know about life insurance.