One of the reasons for this is due to our poor money habits.

As a trusted personal financial and business advisor in Auckland , we are sharing some of the common things that we notice people do that prevent them from building a strong financial position. So, what money traps can you fall into?

You may have money to cover your bills. But you don't have any emergency funds that would cover any unexpected expenses, such as repairs to your damaged vehicle, maintenance around your home, or emergency medical bills among others.

No matter how good you are at budgeting your money, if you don't have an emergency funds that would cover sudden big expenses, you are financially fragile. You might even end up with increased debt because you don't have extra money to pay for these sudden expenses.

Expert advice:

Save at least 20% of your income. Set up a direct debit from your wages to make the saving automatic. If you think you can increase your savings, increase it by 5 or 10% quarterly or yearly. This way you will be able to prevent spending all your money on non-emergencies and build a nest egg for the future.

Some people pay only the minimum amount due on their credit card, thinking that having a credit balance will give them a solid credit history. But in reality you are not building a good credit rating if you cannot pay off your debts. Also, you are extending the suffering from paying your debt for a long period of time and you will be paying more interest because of this. It makes more sense to always pay credit cards off when they fall due.

Expert advice:

If you cannot pay off your debts right away, it is advisable to create a plan for settling your debts. Prioritise those that are urgent and with the highest interest rates. Make a flexible payment plan or schedule that you know you can follow.

Paying your debt off will mean sacrifices in other areas. But the rewards are great if you have a clean credit record and are not bogged down with debt.

You may have many bills to pay and other things that you buy for your everyday needs. But not paying close attention to your finances has repercussions. If you continue mindless spending, you won't be able to save for emergency situations, or have funds to pay off your debt. Mindless spending also prevents you from getting rich.

Expert advice:

If you don't have a budget, it's time you created one. If you are not good at budgeting, it's time to learn. Budgeting your money and knowing how to track your spending habits will help you to manage your finances properly. If you know where your money is going it is easier to make necessary adjustments.

Example, if you are spending $5.00 a day for a coffee, you may want to buy a whole pack and make your own coffee instead. A whole pack of coffee is more affordable and can last for a long period as compared to buying an expensive single coffee every day.

Your spending habits will also depend on the type of people you socialise with. If you spend time with people who love gambling, drinking and partying, it is likely that you may fall into their spending habits, which will affect your own finances.

Expert advice:

There's nothing wrong with socialising with other people. You just need to understand if you can keep up with the kind of lifestyle they have. More likely, in the attempt to blend in, you will be influenced by their spending habits.

Spend time with people who you think will help you be more responsible with your finances. Or seek financial advice from mentors or experts. Find someone that you can trust to help you manage your finances properly.

These are just some of the very common things we see that prevent clients from getting ahead financially. As chartered accountants in Auckland, we help professionals and business owners manage their finances. We also assist them with annual accounts, tax returns, GST and other professional accounting services. We offer business consulting and help clients prepare business strategies for their dream business.

So if you want to know more about how you can improve your personal finance, or if you need help in starting a business, talk to us on (09) 576 4166 or request an online appointment.