7 money management mistakes to avoid


By effectively managing your cash flow you could be in a better financial position

You begin with high ambitions and a solid investment plan, but then find yourself lacking the cash you require. This is a common situation that doesn't necessarily mean you've made a bad investment – it could just be that you haven't managed your cash flow as well as initially planned. Learn seven common money management mistakes and how to avoid them.

  1. Selecting assets that don't generate positive cash flows

    The value of an investment is often related to its cash earnings, whether it's a shop, restaurant or shares in a company. In order to maintain a healthy cash flow, you need to see money flowing into your 'account'. Your account might be a cash management account that allows cash to flow in from a number of sources.
  2. Incurring fees and expenses that are too high

    Consolidating your accounts is one of the easiest ways to avoid paying too many fees. Make sure that you have sufficient funds in your account to cover all the direct debits and make sure that you are not being charged unnecessary fees, such as account fees or withdrawal fees. A Macquarie Cash Management Account (CMA) has no set-up or ongoing monthly fees, and no transaction fees1.
  3. Not having a cash flow projection

    If there's one lesson that can be learned from businesses, it's that understanding what your cash flow is likely to be in the future is just as critical as knowing what it is now. Most of the time, cash flow problems can be predicted if you simply anticipate and plan for future expenses.
  4. Having too many accounts

    If you have to manage and evaluate several accounts, it's unlikely you're going to be able to do a good job of it. A Macquarie CMA is useful because it acts as a central hub and can offer a single, detailed view.
  5. Not paying yourself first

    It sounds simple, but one of the most common mistakes people make is to prioritise bills, such as mortgage payments, phone and groceries, and then the day-to-day expenditures that eat away at the rest. One strategy you can utilise is to work out how much you can pay yourself, based on your bills and expenses, and then the day that you receive your income, make sure that you set aside an achievable amount of savings in a separate account. Continue to pay into this savings account, just as you would your mortgage.
  6. Not knowing your balance

    Don't be misled by what one savings account statement says. You need to know your net balance to understand where you sit financially. That means taking into account all your debts (liabilities), as well as other sources of income. Think like a business and use a savings plan to help you stay on top of your cash flow.
  7. Not knowing where your money is going

    This mistake stems from not having a budget, savings plan or investment plan. When you don't have a plan for every dollar of income you receive and know where it is spent, your wealth can escape you. Create a plan that forces you to spend more wisely. Even if you decide not to make that big future purchase, you will be better prepared for other unexpected expenses.
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Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 (MBL). This information does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire any product mentioned on this page, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice.