5 money mistakes and how to avoid making them in 2024

As we dive into 2024, it’s time for a budget reset. As the cost of living crisis hits home, a finance expert shares how to avoid money mistakes and what to do instead.

As we prepare to usher in a New Year, it’s the ideal time to set goals, including for your finances.

Taking charge of your money has many benefits, including a positive impact on your wellbeing.

Money worries have been linked to psychological distress and even depression.

My Millennial Money podcast host and former financial adviser Glen James is here to help with five money mistakes you need to avoid in 2024.

1.    Making the same old money mistakes

Glen recommends doing an audit of what worked this year, and what didn’t, with your money.

“We’re all humans, we have bad habits that creep in, so look back on the last 12 months and see what did work for you, and more importantly what didn’t,” Glen says.

For example, if you have been using Buy Now, Pay Later schemes, consider if they are actually helping achieve your financial goals.

“It’s a circular thing where you use it, clear it, use it again, pay it back, so really ask yourself “does it feel like I’m making progress with this”,” Glen says.

The next step is simple – repeat what worked and ditch what didn’t.

2.    Make money plans for the future

Glen suggests asking yourself this question: “What do you want the end of 2024 to look like?”

“Get a really clear view of what you actually want out of your money and life by the end of the year, and then work backwards to put in place a system to get there,” he says.

Glen says it’s important to strike a balance between today and the future.

“What things can you do today that tomorrow you will thank you for?” he says.

“So for example in 2024, can you start to add a little more to your superannuation?”

3.    Not being intentional with your money

The start of the New Year is an ideal time to get intentional with your finances.

Start by putting your goals and your values at the centre of all your money decisions, Glen says.

“We really want to start having a value-based budget and a value-based spending system, which means we are putting what we actually value first,” Glen says.

He explains by being intentional and putting your value or goal first, such as saving for travel, you will naturally stop spending on things that don’t meet your values, such as eating out every week or buying new shoes.

Glen says it is important to be very clear on wants versus needs – and which to prioritise.

“Let’s stop confusing luxuries for things that we think are basic necessities,” Glen says.

“So many people say ‘I can’t afford to pay rent’, but then eat at restaurants five times a week, so it is really understanding what are your priorities in your spending plan and what are the luxuries.”

But Glen also says this will look different for everyone, so don’t compare yourself to others.

“What you value could be seen as a luxury to someone else, but because you value it so much it is a base need,” Glen says.

“So if you value going to the gym or getting your hair done monthly, that’s great, set up a different account dedicated to health and beauty.

“And don’t feel guilty about it. It’s ok to have a bank account set up specifically for “your thing”.”

4.    Sticking to a restrictive budget

Glen doesn’t advocate following a traditional restrictive budget, instead opting for a values-based spending plan.

“The reason I’m a proponent of a spending plan is it’s more than just allocating X amount per week to a fixed account,” Glen says.

“Sometimes when we go grocery shopping, guess what? We spend a bit more, and that’s OK.

“It just means if I have to spend more on groceries this week, I won’t go out for a café lunch tomorrow.”

5.    Not getting the money basics sorted

Neglecting the basic principles of good financial hygiene will undermine your economic well-being.

Glen says cultivating sound money habits is the bedrock to success.

This includes:

• prioritising paying off debt,
• starting an emergency fund,
• building up savings,
• investing regularly,
• improving your financial literacy,
• contributing to your superannuation.

More advice on money:

• Top ways to boost your financial wellness
• Love and money: Why couples don’t have to share bank accounts
• Best money-saving tips to make your dollar go further
• Let’s talk money, honey

Written by Bianca Carmona.