Five experts reveal how to fix common money mistakes
Well, that was an interesting year on the financial front.
Australia's first recession in almost 30 years, a sharemarket collapse followed by a fast recovery, massive government stimulus spending and rising unemployment were some of the factors affecting households.
And then, of course, a global pandemic infecting tens of millions of people.
Money mistakes were made by many Aussies in 2020, and the new year brings an opportunity to correct, reset and rebuild.
Effie Zahos, Canstar editor-at-large
MISTAKE: "Making fear-based financial decisions. While it's human nature to want
to take action in a midst of a crisis, sometimes no action is better than any action. The dash
to switch superannuation to the cash option was top of mind for many members. Those that did after the sharemarket fell would have crystallised their losses."
FIX IT: "The lesson here is there is power in staying invested through market volatility, which is evidenced by the sharemarket continuing its rally into Christmas. If you're still invested in cash and retirement is some way off, you're best to get some advice from your fund as to how to make sure your super is working for you. Most funds offer free limited advice."
James Symond, Aussie chief executive officer
MISTAKE: "People became more conscious of their health in 2020 and checked their physical wellbeing, however many did not carry out a wealth check.
Many consumers potentially missed out on an opportunity to take advantage of some of the lowest mortgage rates in history and are still paying over 3 per cent on their variable and fixed home loan rates."
FIX IT: "Borrowers can correct this missed opportunity in 2021 by visiting their lender or mortgage broker for a free wealth check, which could lead to an opportunity to save thousands of dollars a year through refinancing at a much lower rate."
David Koch, Personal finance commentator
MISTAKE: "Like most financial products, buy now, pay later can be really helpful when managing your money - when used properly. But overcomitting or being sucked in by offers to earn reward points by using a credit card to make BNPL payments can become a serious debt trap."
FIX IT: "The key is understanding the payment terms of your BNPL plan and making sure total payments fit comfortably within your household budget."
Sophie Elsworth, National personal finance writer
MISTAKE: "Many consumers were encouraged to pay by card and not cash during the pandemic because of the fears of handling notes and coins that could be carrying germs. Tap and go can easily lead to Australians spending more money without feeling the impact."
FIX IT: "Cash is still critical and the psychology behind spending with physical money has found it impacts consumers more than paying by card. Consider withdrawing cash each week to help keep a closer eye on your spending. When the cash runs out you are more likely to resist spending more."
Anthony Keane, National personal finance writer
MISTAKE: "Tens of billions of dollars have been dished out through JobKeeper payments, other government cash handouts and early release superannuation withdrawals. These windfalls were often wasted - record sales for many retailers are evidence of this."
FIX IT: "Pay yourself first in 2021 by setting up automatic withdrawals from wages or
bank accounts into your savings, investments or super fund. You can still spend money on stuff you enjoy, but understand that small amounts invested today can grow massively thanks to the benefits of compound interest over many years."
Originally published as Five experts reveal how to fix common money mistakes