Three money mistakes to avoid

Three money mistakes to avoid

When it comes to money, mistakes hurt. Whether it’s losing a whole chunk of hard earned cash on a bad investment, or little daily money mishaps, it all adds ups.

The good news is that the first step to preventing these money mistakes is identifying what they are. Once you do that you can look at your own behaviour and make sure you’re not misplacing any of your hard earned cash.

We asked two personal finance gurus what they thought the most common money mistakes were.

The leaky pocket

“Many people let their money leak away so that it’s not put to good use and they don’t know where it goes,” says Marie Mortimer, Managing Director at loans.com.au.

Mortimer suggests taking a closer look at your daily spending to see oppourtunities for saving. 

“Each day, if you spend $4 every morning on coffee, $15 on parking, $8 for lunch, and $3 on an afternoon snack, that’s $30 a day, which is $150 a week, or a whopping $600 a month. Let’s call that $1800 a quarter.

“In that time you might also get your hair cut and coloured twice, which could stretch to $200 each, and pay gym fees of about $200. We’re up to $2,400 a quarter, or $9,600 a year.

“If your partner does roughly the same, it adds up to $19,200. All of this is discretionary spending which could save you almost $20,000 a year,” says Mortimer.

The solution 

Being conscious of your spending is the first step to plugging your leaky pocket.

Sally Tindall, money editor at RateCity.com.au, recommends using a budgeting app to track expenses and encourage less discretionary spending.

“People often don’t want to face the truth of how much money they are wasting on a weekly basis,” says Tindall, “but owning up to your money mistakes and having the evidence in front of you is the best wake up call.”

Apps from ASIC’s Money Smart and MoneyBrilliant are two good options if you want to keep a handle on exactly what’s incoming and outgoing.

Related links

More money going out than going in

Michael Yardney, Director at Metropole Property Strategists says that ignoring the basic money rule “you have to spend less than you earn” gets a lot of Aussies in trouble.

“Some people don’t understand the importance of that but if you don’t spend less than you earn you will always owe people money,” says Yardney.

True enough, Australians love to live outside their means as one glance at the amount of credit card debt there is nationwide will reveal. Instead it seems that putting things on plastic and being over extended is a common money trend.

The solution

“If you have a problem with spending more than you earn you need to remove the temptation,” says Tindall.

“Credit cards are all too easy to get your hands on and use but can bring on a lot of debt that can be difficult to get out of.”

For those in a bad debt cycle Tindall recommends cutting up your card and starting again.

“If you’ve gotten yourself in to a credit card debt situation then you can consider cutting up the card and transferring your debt to a personal loan.”

Not jumping on the investment bandwagon

Another common money mistake, according to Yardney, is that people don’t invest their disposable income while they’re young and have some.

“People don’t understand the power of compounding interest and time,” says Yardeny.

“If you invest early and invest enough before you stop being able to invest, because you have children or your lifestyle is different or your expenses are different, those investments down the track make a big difference because of time and compounding.”

The solution

“Don’t let anyone tell you it’s too late,” says Tindall. “While investing from a young age is ideal, right now is always a good time to start putting some money away.”

“Even if you can’t make some of the riskier investments that you would have made in your youth there is no reason to not contribute to your super and savings, no matter how old you are.”

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Learn more about bank accounts

How do I transfer money from Paypal to my bank account?

Transferring cash from Paypal into your bank account is simple…if you have a Paypal account that is.

Once you’re logged into your Paypal account, the account balance will appear on your home page. Below your balance are two options:

  • Add money
  • Withdraw money

Choose option two if you want to transfer money from your Paypal account to your personal bank account.

The next screen will prompt you to either enter new bank account details or choose a bank account that’s connected to Paypal. You can always add more bank accounts to your Paypal profile.

Another way to transfer out of Paypal is by jumping to the wallet tab on the top menu, and clicking ‘transfer money’. Both options will give you the same result.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

  • Payee’s name
  • Bank, building society or credit union (though this isn’t necessary)
  • BSB (or bank code, which is the branch identifier)
  • Account number

Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

Can I open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

Can I set up a bank account online?

Most Australia-based lenders will allow you to set up a bank account online. Requirements vary from lender to lender, but you will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary ID.

How can I deposit cash into my bank account?

The traditional way to deposit cash into your bank account is to go to a branch and give it to a teller. These days, many banks will allow you to make deposits through an ATM as well.

How can you cash a cheque without a bank account?

You can cash a cheque without a bank account if you visit the bank that issued the cheque. For example, if somebody sends you a cheque from Bank X (as written on the cheque) and you visit Bank X, it’s likely that Bank X will let you cash the cheque – provided the person who wrote the cheque has enough money in their account. Bank X would probably charge you a fee for the service.

Are bank accounts frozen when someone dies?

Yes, Australian bank accounts are frozen when someone dies. If you want to close the account of somebody who has died, you might have to provide proof of death and a copy of the will. You might also have to prove your relationship to the deceased person.

If you have a joint bank account with somebody who has died, you will generally be entitled to all the money in the account. Again, you might have to provide proof of death if you want to change the bank account from a joint account to a one-person account.

How do you transfer money from PayPal to a bank account?

Transferring money from PayPal to an Australian bank account is simple. Just follow these three steps:

  • Go to your Wallet
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  • Follow the instructions

The money will take three to seven business days to reach your bank account.

Once you’ve made the transfer request, it can’t be withdrawn.

How to transfer money to another bank account

Transferring money to another bank is often called a bank transfer, and it can be done a few different ways.

Customers generally need three pieces of information to transfer money to another bank account. Customers need the account name, BSB and account number of the account they wish to transfer money to.

One way of transferring money to another bank account is in a branch with the help of a staff member; they will often give you a receipt as well as confirmation of the transfer.

Transfers can be also made via internet banking and phone banking.

Some banks also allow customers to make transfers via partnered ATMs, especially if the account is with the same bank.

Can foreigners open bank accounts in Australia?

Many Australian lenders allow foreigners to open bank accounts in Australia. Often, this can be done before you arrive in the country – with no Australian address required. When you get to Australia, you can pick up your debit card, using your passport as identification.

How can I close an ANZ Bank account from overseas?

There are two ways you can close your ANZ Bank account from overseas:

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How do I open a new bank account?

There are a number of ways to open a new bank account – online, over the phone or in the branch. The trick is to decide what type of bank account you want beforehand.

It might sound like a simple enough task, but there are literally hundreds of bank accounts to choose from. And each offer their own banking features and benefits.

A comparison site like RateCity can help you work out what bank account product matches your needs.

Once you’ve made up your mind what you want, it’s advisable to have the following information ready for the application process.

  • A couple of forms of identification (such as driver’s licence, Medicare card, passport)
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Can you get a payday loan without a bank account?

Yes. Some payday lenders are willing to transfer loans to prepaid debit cards instead of bank accounts.

Which bank is best for business accounts?

Unfortunately, there’s no definitive answer to the question of which bank is best for business accounts. That’s because ‘best’ will differ from customer to customer, depending on their unique circumstances. These include not only your company’s financial position, but also its size, its age and the sector in which it operates. Another factor to consider is what features you want in a bank account. Your business may require different features than another business; and your business may require different features tomorrow than it does today.

The best thing to do is to thoroughly research the market before opening a business account. And when you do open an account, you should reassess your options every year or two, because the market moves quickly. A particular bank might offer the best account today, but be surpassed by one or several rivals tomorrow.