The Most Common Money Mistakes, From Teen To Retirement

Image: iStock

Money management is something most of us could be better at. Whether it's bad budgeting or unclaimed superannuation, there's probably a mistake or two that you need to rectify immediately. This infographic looks at the often painful money lessons we learn during life's journey: from "young and single" to "empty nester".

The infographic below was compiled by the insurance comparison site Choosi in conjunction with financial literacy educator Michelle House. It breaks down common mistakes people make with money along with some tips to help you get ahead.

For example, couples should be aiming for an annual "nest egg" of $59,160 if they want to enjoy a comfortable retirement. Better start saving now.

[Via Choosi]

WATCH MORE: Tech & Finance News

Comments

    Here's the thing, it's an interesting chart however I when I read that they say that young families should be spending money on income protection insurance I was curious as to the motives, I never personally believed that income protection served a purpose outside making money for the company. If someone wanted a genuine safety net then they should allocate savings for that. Scroll right to the bottom: Written by Choosi, one of the more push insurance companies when it comes to those fringe kinds of insurance, the kind that run ads on daytime telly during episodes of MASH or the love boat. Kinda bs

      Haha I laughed when I saw it was from choosi as well. Insurance can be a big route. I personally go for the largest excess on insurance and try to keep my premiums as low as possible. Then have 3-6 months worth of expenses in an emergency fund. Building wealth a lot faster keeping ongoing expenses as low as possible.

      Haha I laughed when I saw it was from choosi as well. Insurance can be a big rort. I personally go for the largest excess on insurance and try to keep my premiums as low as possible. Then have 3-6 months worth of expenses in an emergency fund. Building wealth a lot faster keeping ongoing expenses as low as possible.

      I'm kinda split on the whole insurance thing, particularly income protection. One the one hand, you never really want to be in a position to need it, but on the other hand you're damn glad you have it if you do.

      For health insurance, I've definitely come out behind on that one. If I could have managed it, I'd have been far better putting the money aside each pay and just paying for stuff outright, but for Income Protection, its such a small amount each week that even after nearly 30 years it wouldnt take long for me to get back what I've put into it over that time.

      And given I have a mortgage, I'd rather have that backstop than not.

      The point about Choosi being bias on this aside, the average Joe is not going to be able to put enough money away to be able to support their family and keep paying off their mortgage for very long without income protection cover. It's not a big cost but the protection it can provide is priceless for most. IMO it's the most important insurance cover anyone could have as it covers both temporary income loss due to sickness or injury as well as long term income loss as well if you cannot return to work. Plus the premiums are tax deductible making the cost even more affordable.

      Don't look at income protection cover like you would with hospital cover. Personally I think your point about putting money aside instead of paying premiums works well instead of paying for hospital cover (unless you are sick or injury prone).

      Last edited 20/03/17 9:39 pm

      I can't help but laugh at the 'allocate savings' argument.

      Here's a hypothetical for you:

      Boris, tradie, single, 30 years old, earning $72k a year, paying a mortgage (say $300 a week), has reasonable expenses and saves say $200 per week, $150 of this goes towards the "safety net" you speak of. No income protection insurance held...

      Boris is in a car accident, loses his arm, can never work again as a tradie which he did a 4 year apprenticeship to build the skills for. $72k income gone. What's going to pay his mortgage now? That $150 week safety net over the past 5 years has made him say $50k (including a bit of interest). That's ONE year of net income. Government benefits which are lucky to be $600 a fortnight?

      Now add Income Protection insurance. The most comprehensive for policy Boris I could find was $58 a week out of pocket (can be reduced to around $7 a week out of pocket if you want to fund the rest through super, which is an option). That $7 turns into $5 a week as the premium is deductible. What does this get Boris? $4,927 every month (approx $59k a year), indexed by CPI until he turns 70. FIVE dollars a week out of pocket to have nearly $60k of his income replaced every year until he turns 70, that's $2.36 million in today's dollars. How's that $150 a week safety net looking now? And you don't see the value of insurance?

      That premium and policy is a real and accessible for the hypothetical 'Boris'. In addition, that premium is "Level", which means it stays at that amount for the life of the policy (other than CPI increases if you wish to take them, this is optional).

      You will never understand the value of insurance until you see someone who uses it. I have seen dying singles mothers keep them home and family together because of Income Protection insurance.

      Next argument "but they don't ever pay". I am yet to see a legitimate claim denied and in just 7 years in the industry I have seen dozens of cases paid and not a single one denied that had a legitimate case. Some paid that I didn't even think would be paid. Why? Because the policies I recommended (and the one mentioned in Boris' example) are Retail, fully underwritten comprehensive policies. Not like the nasty policies you see on TV, I wouldn't recommend these to my worst enemy.

      As you can probably tell, part of my job is insurance. I am a Financial Planner and not a single client leaves my office without it once the know the value of it. My advice, see a Financial Planner and explore the options.

      So, please, can you all tell me again how Income Protection insurance is just a scam or waste of money???

      Income protection insurance is well worth it, as long as it's a good policy. It also pays to have it paid via your super, as it works out cheaper (I'm with an industry fund).

      If you have any dependents you should absolutely have it. I suffered from a health crisis that put me out of work for almost two years. Without my income protection insurance I would have been living with my in-laws (who had their own money issues at the time), with myself, my wife and our two kids all cramped into a single bedroom.

      It took me a long time to get better and back into the work force, but my income protection policy paid the bills and kept us from a real financial crisis that we wouldn't have been able to get away from.

      Important notes:
      - Check your policy for exclusions, especially mental health (many policies don't cover this)
      - Check on the waiting period before you can claim, and if you couldn't go that long without income, see if you can reduce it through slightly higher payments (I did this to reduce the waiting period from two months to one).
      - All policies I've seen only pay you a portion of your previous income, normally around 75%. Something to be aware of.
      - Shop around, and don't assume all policies are the same, check the details.

      For those skeptics, I'm not an insurance shill and hate insurance companies just as much as anyone else. But when shit hits the fan, you want to make sure you're covered (Centrelink doesn't count, the wait is long and the payments are pitifully small).

    Great job getting accurate info there.....
    The HELP voluntary repayment bonus was removed on 1 January 2017

    Reverse mortgages might impact your pension payments, but remind me again why you're sitting on a sizable asset while living on taxpayer funds?

      Because a pension is the reward you get for working 40-50 years and paying 35% to 40% being a "taxpayer" for all that time. It's not 'welfare' like the dole.

      Remind me again why the pension is means tested AT ALL?

        Simple, the 30-40% you pay in tax is not 'banked' by the government now to pay you a pension, it's used to pay for everything today. Governments that provide higher pensions also have higher taxes (i.e. Sweden at ~70%). Super is also a tax, but one you are given to manage yourself for your future. So your choice is, pay higher taxes and have the government pay you a higher pension, or have super and manage it yourself. If all the money is going into pensions (and it accounts for the largest part of the welfare payout), there is less money for hospitals, education and infrastructure etc. You then screw the younger working generation and effectively the rest of society as they support your pension.

          Yeah, but providing a pension to only people who don't have their own assets & super is rewarding people for financial mismanagement.

          I can either successfully manage my assets to build wealth over my career and contribute more to super only to have to support myself later in life, or I can piss my money up against the wall buying overseas holidays and fast cars all my life knowing the government will pay everything when I get old.

          Either have a pension for everyone, or have it for nobody.

          Don't reward those who go their whole life without grasping the basics of money management and punish those who have.

          Of course nothing is banked: the 30-40% tax that I'm paying now is supporting the last generation of workers, under the assumption that the 30-40% tax paid by the next generation of workers will support my retirement.

    It's ok to laugh at this till it happens to you. In my early 30, now in my mid 50s, I injured myself at work and have not been able to work often or for long periods of time since. Mine also cost my marriage, she left after the court case was lost. It has become a nightmare trying to live on the little income I receive on the disability pension. I still don't receive as much each fortnight today as I did each week 20 years ago!!! If I do get work, the government takes 50% of my earnings plus tax. Having to open your home to strangers to lodge with you, because of the mortgage payments plus other expenses, has been an eye opener as to what different people are like once the move in. I still don't receive as much today each fortnight as I did each week 20 years ago!!!
    (not after sympathy, just showing how a little amount a month can be beneficial if you have a serious injury.)

      I was almost you. I'm convinced that if I didn't have income protection insurance to claim (which I'm lucky I could, I've since learnt many policies wouldn't have covered my situation), I would have ended up divorced and homeless.

      Thanks for sharing and I hope things get easier for you.

    Tell us who is at fault when a person's life savings for retirement disappears when a popular company handling one's superannuation become bankrupt.
    Many of us are brilliant at handling money until something disastrous happens outside our control, we never see any of the other "Rah, Rah, Join Up Now, Great Rates" fund managers rushing to help!

    is throwing away a HDD with a million worth of bitcoin on there?

Join the discussion!