Learning how to manage and optimise your finances is far from simple and takes time, effort and unwavering commitment.

We will help you achieve your financial goals as we have a look at the 10 financial mistakes every Australian has made and let you know why you should avoid it!

Mistake #1: Not having an emergency fund

At the core of all expensive and troublesome consumer debt is a lack of available savings. When you’ve worked hard to save money, you will always think twice before spending it. In addition, having an emergency fund means you don’t have to use your credit card or take out an expensive payday loan to get through an emergency.

An emergency fund should have about 6 month’s worth of living expenses for you and your family and should ideally be kept in a savings account that offers good interest.

Mistake #2: Taking on debt unnecessarily

Unnecessary debt is usually debt used to purchase a range of things you don’t really need. This may be the latest mobile phone to hit the market, expensive clothes and electronics as well as taking on heavy debt to fund holidays and travel that you can’t really afford.

Opening up store accounts and taking on expensive contracts and memberships are also things that tend to drain income and cause serious dependence on debt.

Although it’s great to have these items and lovely to travel, taking on such large debts and having to pay these off for years to come is simply a bad financial move and can be avoided if you budget well and focus on saving for the things you love and want to do.

Mistake #3: Using short-term loans & credit cards to repay loans

Short-term loans and credit cards carry the highest rates of interest and can cost you more than you could possibly imagine when you use them to repay existing debts. What is important to remember is that if it’s tough to afford your debt repayments right now, it will be worse when you add yet another loan on top of it!

Do not take out a short-term loan or use a credit card to repay debts. If you really can’t afford the repayment during this period, contact your creditor and let them know. They may defer your payment and even consider lowering your rate or reducing the minimum payment required to make it more affordable for you.

Mistake #4: Not maximising savings

Whether it’s retirement savings or goal orientated savings, leaving money in a below average savings account is a big mistake. If you’re not using the money why not take advantage of term deposits that offer higher than average interest rates? You could also invest the money in a range of beginner friendly investments such as shares and bonds or managed funds.

If you need access to your savings, you can open a savings account with a lender that offers a great interest rate and flexible, easy access to your cash when you need it. Some savings account offer great bonus interest rates and impressive revert rates which will ensure you get the most from your savings.

Mistake #5: Sticking to minimum repayments on your home loan & credit cards

Simply switching to fortnightly home loan repayments as opposed to monthly repayments will give you one full extra annual repayment and will save you thousands over the course of your 20 or 25 year mortgage term.

Any extra payments you make towards your home loan will save you a lot of money which is why those who stick to their minimum repayments are making a huge mistake and missing out on big savings.

The same goes for credit cards. Sticking to minimum repayments simply means that the bank will charge you interest on the bigger balance over a longer period of time. Credit card interest rates are generally high and this is one of the most expensive debts Australians maintain. Learn how to maximise the use and properly manage your credit cards to help you save.

Mistake #6: Using payday loans to make it through the month

Taking out a payday loan to cover a financial emergency or make a purchase you simply can’t afford outright is not something that will devastate you financially but, making the use of payday loans a habit will.

Payday loans carry high interest rates and can cause borrowers to quickly become dependent on them to make it through. If this sounds like you, be sure that these payday loans are causing you and your finances more harm than you can imagine. The best thing that you can do is focus on repaying all of your short-term loans and making a commitment to not take on any more.

Mistake #7: Not considering retirement in your 30’s

How much you need to retire will depend entirely on the lifestyle that you choose to maintain but generally speaking the average Australian will need between $450,000 and $550,000 while couples will need to tuck away between $650,000 and $700,000 for a decent retirement.

If you’re in your 30’s and have not started saving for retirement, this is a financial mistake that will cost you dearly! Although there are a wide range of investments available to Australians to generate returns that beat bank interest rates, compound interest and starting your retirement savings early are key to hitting and exceeding your retirement savings goals.

Mistake #8: Not having a debt repayment plan

The only way to achieve true financial freedom is to become debt free or maintain only debts that are adding to our pool of assets. A debt repayment plan works hand-in-hand with a budget but is a different because it requires you to theoretically choose what to do with any extra cash flow.

This will be done by choosing a debt repayment strategy. This strategy will either be the avalanche debt repayment method or the snowball method and will help you repay debt quickly and in a way that helps you save money.

Mistake #9: Not setting financial goals

Setting financial goals is crucial in ensuring that you know where you want to go, which is one of the best ways to make sure we maintain financial discipline.

Financial goals should always be split into short-term, medium-term and long-term goals to ensure you feel good about achieving the short-term ones while staying motivated to hit your medium and long-term goals. Long term goals can include repaying your mortgage early and saving thousands while short-term goals can include repayment of credit cards and achieving a set savings goal.

Mistake #10: Not sticking to a budget

Setting financial goals is like choosing a destination and creating a budget is like choosing a route to get there. With so many free expert guides on how to create a budget and hundreds of tools and apps to help you maximise it and stick to it, we have no valid excuse for not creating and sticking to a budget.

A budget allows you to optimise your finances by being very specific and intentional with where your money goes. It also allows you to see where your money is going so that you can reduce spending and increase savings and investments.