7 STEPS TO PERSONAL FINANCIAL FAILURE

Want to face endless financial difficulties during your lifetime? There are a few simple things you can do. For all of you who are sick of hearing all the talk about ways to improve your financial position, you are not alone, judging by the popularity of our 7 easy steps to financial failure.

1. Pay no attention whatsoever to where your money goes
Keeping a budget, tracking spending and knowing how much is in your bank account could all potentially make you realise that you are frittering away your hard earned money on unnecessary expenses. This might lead you to feel that you need to cut down on these areas, so try to avoid any knowledge of your financial affairs.

2. Use credit cards for anything and everything
Of course, you want to be sure that you never pay the card off in full, and of course rather than shop around for a card that suits your spending, make sure that you choose one with high interest and fees and no rewards. This way you can be sure to pay interest close to 20% on everything that you buy, while getting nothing in return.

3. Don’t save anything
If you can possibly spend everything you earn, then do. The last thing you want is to have money lying around tempting you to invest it – that would only achieve financial security.

4. Invest in last year’s winner
If, despite all your efforts above, you do wind up with leftover money (we can hardly call it savings if it is purely by accident that you have it at all) then try to invest in whatever performed best last year. Since financial and investment markets move in cycles, the odds are against you doing well with this strategy.

5. Ignore asset allocation
Pay no attention whatsoever to asset allocation principles, or the level of risk you can tolerate. Five years to retirement? High volatility is the name of the game if you want to lose the lot. If you are still young, go ultra-conservative to make sure your investments don’t keep up with inflation and lose spending power over time. Ideally, keep it all in a bank account that pays 0% interest.

6. Put all your eggs in one basket
Diversification would only reduce the risk of you making a poor decision on one investment, or increase the chance you’ll pick something of high quality.

7. Never seek professional advice
A professional should make sure you avoid steps 1-6, and they’ll probably find other ways for you to save more, invest wisely and be financially secure both now and in the future. They may even have access to independent research like FundSource, so they’ll have recommendations on funds to invest in that expert analysts have confidence in, and are good investments for the future.

Of course, if the idea of sleepless nights, paying endless amounts of interest, and living out your retirement solely on superannuation doesn’t appeal, then maybe financial failure is not for you – in which case you would want to ensure that you avoid the suggestions in steps 1-7 above.

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