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Book Review: Rich Enough by Mary Holm

Written by R. A. Stewart

Mary Holm is a New Zealand financial adviser who has written books on the subject of a personal finance nature for years and her book “Rich Enough? Is certainly a very good book with lots of down to earth information written in simple easy to understand terms.

There are several important points which she highlights and the first one is the importance of starting early. In fact the earlier you start the more money you will accumulate in the long term.

Starting early develops good savings habits which will in turn serve you well during your lifetime. 

The second point is to get rid of any debt you have as soon as possible and staying out of debt. If you are paying 10% interest on your debt then paying off that debt is just like being paid 10% interest on your money. It makes no sense to have money invested at 5% interest when you are paying 10% interest on your own debt. That money is better off in your pocket.

Falling into the Christmas trap can be costly as Mary points out. 15% of New Zealanders have more than 11 people on their Christmas shopping list to shop for and about 27% of them are women who plan to spend over $200 per person on presents. About 17% of people expect to spend over $1,000 on Christmas. Some suggestions on how to reduce your Christmas spending are given by Mary.

A section on New Zealand’s retirement scheme Kiwisaver tells of the excuses people provide for not joining and one of those excuses is “I have not got around to it.” 

This is stupidity according to the author, Mary Holm.

Another reason given is, “My grandma lost it all during the Global Financial Crisis.”

As Mary points out, these finance companies which went under during the GFC lent money to people who the banks considered too risky to lend to so they borrowed off the finance companies and paid higher interest rates. As a result, investors who lent money to these companies received high interest rates.

As the saying goes, higher return often means higher risk.

The importance of diversification is discussed as are the value of different types of investments. 

My rating: I rate this book a 10 out of 10 based on the fact that the information presented is applicable to everyone irrespective of their means. 

To find a copy, go online. Trademe, Ebay, and Amazon may have a copy for sale.

www.robertastewart.com

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6 Benefits of Saving Money

The value of saving money

Written by R. A. Stewart

If there is one habit which will make your life easier it is the habit of saving money from each payday. As a responsible adult this is the mature thing to do. People who just spend all of their money leaving them broke before the next pay day arrives are irresponsible. 

Saving money without an end goal may seem pointless to some people and that is why it is important to have goals so that your money has a purpose. This gives you motivation to save otherwise you will become just like most people and just fritter your money away and when that rainy day comes there will be nothing to fall back on.

Here are reasons why you must save:

  1. Saving helps you to avoid borrowing

People who have no savings often borrow for stuff they need, such as some appliance breaking down or a medical emergency. Borrowing adds to the cost of whatever it is a debtor is paying for. This cost is called interest. Another word for interest is dead money because it gives you nothing tangible for your money. If you have debt then getting rid of it must be your first priority.

  1. Saving helps you to avoid future inconvenience

Imagine having no savings and the car, washing machine, or internet modem, or something else needs fixing and you have no savings. These are items which we take for granted but having no money to repair or replace something which needs replacing will cause you a great deal of inconvenience. Having a rainy day account for emergencies is a good idea.

Having

  1. Saving enables you to build your wealth

Saving money will help you to build your wealth portfolio and you do not need to have a fortune to begin investing but you do need to invest in order to create a fortune. Share market platforms such as Sharesies and Hatch enables anyone to invest on a shoestring. Investing with these platforms helps build your financial literacy.

  1. Saving provides more opportunities 

Saving money creates more future opportunities. It provides opportunities to study, to travel, and to move locations for work. Your future you will thank you for what you have saved today. Will anyone reach the age of 65 and regret having made consistent contributions to kiwisaver? I think not.

  1. Saving provides more peace of mind.

Saving provides a certain amount of peace of mind. When you have something up your sleeve to pay for emergencies when you need it life becomes much less stressful. That is something which should be part of your financial plan.

  1. Saving helps prepare for retirement

Having money behind you helps make your retirement years more comfortable. Whichever country you belong to it is important to join your country’s retirement scheme and take advantage of any tax incentives if any.

About this article: The contents are of the opinion of the writer and may not be applicable to your own personal circumstances. You are advised to seek professional budget advice if necessary. Feel free to print this off for easier reading. You may use this as content for your blog, website, or ebook.

Www.robertastewart.com

 

Disclaimer: I may receive a small commission if you sign up with sharesies. (see below)

 Investing with Sharesies is an accessible and straightforward way to invest in the stock market. By following these steps, you can get started on your investment journey and start building your wealth. However, before making any investment decisions, it is essential to do your research and seek professional advice if necessary.

 Join Sharesies here

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3 Mistakes Investors Make

Avoid these three Financial Mistakes

Written by R. A. Stewart

Building an investment portfolio is similar to building a relationship. It takes time and patience but over caution can be just as costly. A lot of tolerance is required because in finance and in life in general you do not always get your own way. Life has its own ups and it is during the downs that we show our true character. It is when our true colours come to the surface.

Human nature or emotion as it is can interfere with one’s better judgment. This applies to relationships and finance.

Here are the biggest mistakes made by investors.

Mistake number one-Greed

“If something is too good to be true then it almost certainly is,” but many people have fallen into this trap by investing in something which was offering above average returns. In doing so they completely ignored another rule in finance and that is to diversify. During the 2008 Global Financial Crisis many investors lost their entire life savings when various finance companies went under. Several people have their entire life savings invested in one company. Whatever has been reported about these companies it is up to investors to do their own due diligence and invest sensibly. Placing all of your eggs in one basket is certainly not investing sensibly. The key word for sensible investors is “diversify.” This minimizes risk. Two things to bear in mind is that when there is an opportunity for a capital gain as there is with shares, there is also the chance for a capital loss. The other thing to remember is that when you hear stories of someone who made a killing on the share market by placing all of their eggs in one basket, you seldom hear of individuals who tried the same thing and lost their money. Greed will eventually get the better of investors who thought they were smart enough to beat the market.

Mistake number two-Timidity

Playing it safe is risky. Being overcautious will mean that you miss out on opportunities which risk takers take advantage of. There is no suggestion that you should be reckless and ignore common sense precautions but in relationships you need to risk getting hurt in order to discover what you are looking for. As far as financial matters are concerned, you have to accept some level of risk but this is manageable by diversifying your portfolio. Managed Funds or Mutual Funds as they are also called is an excellent way for ordinary investors to get involved in the share market. In New Zealand, Kiwisaver, Sharesies, Kernel Wealth, Hatch, and Investnow are excellent platforms for ordinary investors to get involved in shares. If you are from the US you may want to look at Robinhood which operates in much the same way as Sharesies.

Mistake number three-Impatience

“It is time and not timing which is important in the share market,” is a cliche which is worth keeping in mind. Patience is a virtue and this is applicable to relationships and finances. Some people lack patience that they invest their money in abc shares then when their portfolio is stagnant they sell those and invest in something else and sod’s law, the shares they sold at a lower price suddenly rises meaning they have missed out on any gains which would have recovered their losses. The share market is a long term gain. If you require the money in the short term then investing in shares may not be the right option. Bank deposit probably is but you have got to do your homework. 

It is all about understanding the risks and whether you have the mindset to handle the ups and downs of the money markets.

It really is up to your own risk profile.

About this article

You may use this article as content for your blog/website and as content for your ebook. Feel free to share this article with others.

The information here is of the opinion of the writer and may not be applicable to your personal circumstances.

Invest in sharesies here:

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

Disclaimer: I may receive a small sign up bonus if you join sharesies.

www.robertastewart.com

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People you should not take Money advice from

Written by R A Stewart

Have you heard of the donkey story where an old man and his grandson were walking the donkey along the street?

If not here is the story:

An old man and his grandson were leading a donkey as they were walking along the road. A bystander said to them, “Why don’t you both get on the donkey and ride it?”

So they both rode the donkey but further down the road the second bystander said, “Hey look at that poor donkey having to carry two people; that is cruelty.”

So the boy got off the donkey and led it along the road while the old man rode it but further down the road, a third bystander said, “look at that poor boy having to walk while that old man is riding the donkey.”

So the old man got off the donkey and his grandson got on, however further down the road, a fourth bystander said, “Look at that poor old man, walking along the road while the lad is riding the donkey.”

So the boy got off the donkey and they both continued their journey as they both led the donkey on foot.

What is the moral of this story?

The short answer is that people can take away your power to think for yourself if you allow them to.

If you have a bit of money to spare there will always be people who think they know what you should do with it and a lot of these people have little or no savings of their own.

Here is an example:

I know someone who years ago made a fortune on sports betting. He turned a few hundred dollars into over thirty grand. In the early stages when he had about six grand his colleagues at work were giving him advice and one was to use the six grand for a deposit on a car. I told him that not only would he be back to square one but he would also have a debt to pay. 

He was sensible enough to ignore stupid advice like that. I did however, tell him that he should at least invest enough into his Kiwisaver account to get the government incentives.

Financial illiteracy is common which means it is vitally important to read books on personal finance and pick the brains of the authors rather than allowing random individuals to infect your mindset.

A bad attitude towards money can be a hindrance of wealth. I once said to a lady that her daughter should attend financial seminars when she is older in order to meet successful men. (She was 9 or 10 at the time). She said, “Men like that are selfish and stingy.”

I suppose if you are a gold digger you would think like that. I mean “who needs financial advice when you can just get a man”

It is worth remembering that some of the best financial writers are women, such as Frances Cook and Mary Holm. They strongly encourage women to take responsibility for their finances rather than just have a man as their financial plan.

The young people may not be your best source of financial advice either because they do not have the experience of investing like the older generation. 

One of the things which the financially illiterate say to reinforce their opinions is “You can’t take it all with you.”

That may be true, however, during one’s lifetime, there are life changing events which require savings. Here is a list:

Flatting 

Buying a car

Going on your Big OE

Further education

Saving for a house

Marriage

Children

Retirement 

Responsible people will get into the habit of saving from a very young age in order to be able to finance whatever crops up during their lifetime when they have the ability to do so. Stupid people will fritter away their discretionary spending money so that when a rainy day comes they have money squirrelled away for something to fall back on.

About this article

You may use this article as content for your ebook, website, or blog. The opinions in the article are of the writer’s own opinion and may not be applicable to your own personal circumstances therefore discretion is advised,

www.robertastewart.com

https://www.robertastewart.com

Your friends can be hindering your financial dreams

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Liabilities: what they are

Liabilities: what they are

Written by R. A. Stewart

A liability is when you have a debt to pay. You are responsible for that debt until it is paid. The opposite of a liability is an asset. It is something which provides some kind of value to you.

An example of a liability is when you have borrowed money from a finance company to purchase a car. You pay a certain amount to the finance company each week or fortnightly. It is a liability because it takes money out of your pocket and reduces your wealth.

An example of an asset is an investment with a finance company which lends out money to car buyers. This is an asset because it puts money into your pocket and increases your wealth.

Borrowing money is not the only type of liability which can reduce your wealth.

Others can be, keeping pets, smoking, drug taking, drinking, hobbies, and so forth.

Have you ever heard of dog owners spending thousands of dollars on vet bills when for just $50 they could have had their pet pooch put down. I know of some people who have spent $1,000 on a vet bill for their cat. If that is not financial stupidity I don’t know what is.

Emotional spending is very costly in the long term.

Borrowing for something which does not give you anything in return is a drain on your future financial welfare. Paying for a holiday is a perfect example. This is something you can do without. If you don’t have the money you don’t go on holiday. It’s as simple as that.

Hobbies can be expensive; have you ever seen those news items on television where some collectors have spent thousands of dollars on their items. Whether it is a doll collector, model train collector, or whatever, these people spare no expense in getting their hands on the next item to add to their list.

Becoming an investor rather than a consumer will help you to be better off financially in the long run. By minimizing your consumer purchases and investing that money instead you will build up an investment portfolio, whether that be in the share market, property, and the like. Stuff doesn’t last long and it loses its value over time.

Investing in yourself will pay dividends in the long run if you apply what you have learned. It is just a matter of applying whatever is applicable to your own life. There is a lot of investment advice on the internet and in books but not everything you read will be applicable to your personal circumstances. Having the ability to discern which advice to follow takes experience.

What you spend your money on today will have an effect on your future lifestyle. It is all about making the right choices in life. Politicians talk a lot about achieving different outcomes for certain groups of people. Personally, I think that it is choices which people need to take responsibility for because the only reason why there are so many different outcomes is because people make different choices.

About this article

This article is of the opinion of the writer and may not be applicable to your own personal circumstances therefore, discretion is advised. You may use this article for content for your website, blog, or ebook.

Www.robertastewart.com

 

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Prioritizing your spending

Prioritizing your spending

Written by R. A. Stewart

Life is all about making priorities and it is not all about money and how you prioritize your spending but about what you do with your time. We have different financial commitments and different levels of income but when it comes to time, we all have an allotted 24 hours in the day, no more and no less but our income and how we earn our income will have an effect on how much time we have to devote to the important things in our life.

Many people sacrifice their time for money by spending all of their time working leaving little time for anything else. They are out of balance.

If you have a specific goal in mind such as saving for a house deposit then the sacrifices may be worth it in the long term. Maybe because only you will know whether the long days were truly worth it. It all depends on what your priorities are.

What factors should you consider when setting priorities?

Here are several to consider:

Your commitments

Your debt levels

Your age

Your family circumstances

Your health

Your career

Your pets

It is important that you base your priorities on what is important to you and that you do not try to copy someone else’s figures. There is no one size that fits everyone; it is your own needs and wants which determine how you are going to prioritise your spending.

Everyone has different levels of commitments; these have to be managed as best as you can. Commitments can be financial such as a mortgage or other debt or something more personal such as a relationship. 

Your age is another factor; you are not going to take out a 30 year mortgage when you are 60. If you are in your twenties you will have different priorities. As a young investor you can take more risks with your investing strategy because you have more time to recover from a financial meltdown.

That does not mean being reckless with your investing but rather; taking calculated risks.

Your family circumstances are another factor to weigh up. If you have kids then you will have less disposable cash to play around with than if you are single. The flip side is that if you are in a relationship then you have the advantage of having two incomes which will make it easier to save for major life events such as having kids. It is a good idea to put aside money for this purpose.

Then there is your health to think about. If you are fit and healthy then that is great but as we all know, Father Time catches up on us sooner or later. If you have health issues which lessens your chances of reaching the retirement age then your priorities need to be different from those who are healthy.

Then your career or job is a priority. It has to be your top priority because it pays the bills. It is where you spend so much of your time so a carefully chosen career will help make your life more meaningful. Adding different strings to your bow will give you more options. Learning does not end once you leave school is a lifelong project.

Your pets can bring enjoyment to your life but they can also become a burden to your finances as a lot of people have found during the cost of living crisis. The SPCA were swamped with cats and dogs because people could not afford to keep them. When deciding whether to get a dog or a cat it is important to work out how much this is going to cost you. It is also important to consider the fact that keeping pets fits the discretionary spending category and that money spent on them will be better off going towards the mortgage if you have one or towards your retirement fund. 

As far as pets are concerned, many people let their hearts rule their heads; I mean honestly, why else would one spend a grand on a vet bill for a cat or even more than that on a dog when it would be cheaper just to have the animal put down?

 

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your ebook, website, or blog. Feel free to share this article.

 

www.robertastewart.com

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3 Ways to lose during a Share Market Slump

It is easy to be very confident about your investments when all is going well and your investments are rising in value but it is when the market has taken a dive when your real character is revealed.

Investing needs to be done with the right mindset otherwise allowing your emotions to take over your decision making can turn out to be very costly in the long term.

The newspapers may say, “Investors have lost millions,” but the reality is they have lost nothing, well not unless they have sold their shares during a market slump.

If you have an investment strategy then the possibility of a downward trend should have been taken into account so a market downward trend will not be of a concern.

There are three ways which you can lose during a share market slide; here are are:

  1. Sell your shares

Selling your shares during a market slide is a guarantee that you will lose; more so if you bought your shares during the peak. The share market will have it’s ups and downs and is a long term game. If you are saving money for the short to medium term then investing in growth funds may not be the right place to have your money. On the flip side of that is a rising market can help you reach your savings goals faster. It is the catch 22 situation in that if there is an opportunity for a capital gain there is an opportunity for a capital loss.

  1. Change funds

Changing from growth funds to balanced or conservative during a market downturn is a way of guaranteeing a loss. In other words you are selling shares at a lower price than you bought them for. It is the issue of allowing your emotions to rule your better judgement. 

  1. Stop Contributions to your retirement fund

This is a sure way to lose during a market slump because you are missing out on bargains in the share market. You may not lose your money by not investing during a market slump but you are losing in other ways because if you decide to just leave your money in a low interest savings account the value of your savings is being eroded by inflation.

Talk about a sure fire loser!

The share market rewards consistency and that means making contributions through good times and bad. During times when the share market is during a bear market phase you will get shares at below their market value while during a bull market cycle you will get a lot of shares at above their market value. All of this will average out over a period of time and the longer you are involved in the share market and participating the more chance you give the law of averages to work in your favour.

About this article

You may use this article as content for your ebook, website, or blog. Feel free to share it with others.

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

 

Note: This article is of the opinion of the writer and may not be applicable to your personal

www.robertastewart.com

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Setting personal goals

Setting goals does not have to involve money on its own. If you set goals based on money then your life is out of balance. It is important to decide what is important to you and is the vehicle to helping you to achieve those aims. In short, money should not be your number one aim. 

If you accept a job with a higher pay then you had better weigh up everything that the job involves such as the hours of work, the commute to the job, and responsibilities that come with the job and then decide whether it is worth all of the hassle.

It all depends on your personal circumstances and preferences. There is no size that fits everyone when it comes to goal setting. There is no such thing as “should” even though there are people who think others should do this or do that.

Personal goals are something which are personal to you. Here are some examples of personal goals:

Learning to swim

Learning a new language (specify)

Learning to drive

Learning to use the coffee machine

Learning to salsa dance

Reading the Bible from cover to cover

Meeting your favourite sports player

joining a sports club (specify)

The most important factor in determining your personal goals is your passions. The other factor is your talents. These two are often linked. Whatever most interests you is often where your talents lie but that does not mean that you cannot learn anything new. Most skills and talents are transferable. 

We often see international sports people using the skills which enabled them to reach the elite level in their chosen sport to help them succeed in their chosen career after they have retired. Many have prepared themselves for life after sport by studying to gain a degree during their playing days.

It pays to have a number of strings to your bow as a backup. 

You have to specify what your goal is otherwise it just becomes a wish and anyone can make a wish but it is taking action which will turn a dream into reality.

If you went to your travel agent and asked for a plane ticket they are unable to help you unless you were specific and told them your proposed destination.

Examples of vague goals which are non specific are:

To lose weight

To get fit

To be happy

To save money

The problem with vague goals is that there is no way of knowing when you have achieved your goal. Goals need to be specific and timed. A goal of “To deposit at least a grand into my retirement fund by June 30th, 2023 is a specific and timed goal. You have either achieved your goal or not.

A get fit goal may be “To be able to run a 5k fun run by 31 December 2023.” This is another example of a specific goal which has been timed.

Giving your goals a timeline will give you more motivation. Just telling yourself that one day or some day I will do such and such is not a goal; it is a wish and there is a big difference between wishing for something and being serious about achieving it.

Life needs to be in balance and it is important to consider your personal talents and preferences. Many people have achieved extraordinary success in their chosen field and despite not setting out to make money have accumulated a great sum of money doing something they enjoyed. 

The key here is to not make money your number one goal in life but rather discover your calling. No one else can discover that for you so come out of your shell and broaden your horizons. Who knows, you may just discover your life’s calling in doing so.

About the article

You may use this article as content for your website, blog, or ebook. The information may not be applicable to your personal circumstances therefore, discretion is advised.

www.robertastewart.com

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Needs Versus Wants

Written by R. A. Stewart

What is the difference between a need and a want?

To explain it in plain language a need is something we need for our day to day living such as food, shelter, clothing, and utilities, while a want is something we desire but can do without. It is all down to prioritising your spending. 

Even a need is something which you have a measure of control over. We all need clothing but you do not have to purchase the most expensive clothes in order to meet this need. Your local charity shop will be able to supply you with appropriate clothing for a few dollars.

The same applies to food; you can meet this need by taking advantage of the specials in the supermarket and by not wasting food.

Money which is able to be saved by making smart purchases can be put to be used elsewhere. “Better in your pocket than someone else,” as the saying goes.

That does not mean you should just fritter away the money on something which you want.

Some people will try to reduce whatever they spend on a need in order to finance a want, none more so when we are talking about their hobbies and the things they are passionate about. Collectables are a prime example.

When you hear about the collections of some people whether that is dolls, beer labels, or whatever, you think that how can one person finance all of that? Some other area of their personal finances must suffer in order to pay for all of it; that may be travel or retirement savings.

We all have a choice of what we spend our money on at the supermarket and spending that money on good wholesome food is a wise investment. Can you spot any foods on this list that you may leave off your shopping list?

The difference between a need and a want can be subjective; for example a person who is addicted to alcohol, cigarettes, and drugs would categorize these items as needs but these are wants to someone who does not have to deal with these issues.

Needs

Housing

Clothing

Food

Water

Medical needs

Wants

Overseas holiday

Hobbies

Gambling

Expensive clothing

It is important to note that needs vary from one person to another and that your budget needs to be tailored to your own personal circumstances and not copied from someone else’s needs.

Before you spend money on expensive needs such as a vehicle, ask yourself, “What is the least expensive option?”

Purchasing a flash car just to impress your peers and to keep up with the Joneses is a mistake and will cost you in the long run. 

A vehicle may be a need if you require it for transport but it becomes a want if you desire the most expensive model. 

There can be consequences to not having your needs filled. It may result in illness and even death if your medical requirements are not met.

It is all a matter of getting your priorities in the right order and that requires wisdom. You do not have to experience something to know that it is bad for you; you just need to open your eyes and see the experiences of others and learn. 

About this article

Feel free to share this article with others. You may use this article as content for your blog, website, or ebook. 

www.robertastewart.com

 

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New Zealand Financial Adviser says…

“3 Money Mistakes made by people”…

according to New Zealand financial advisor Frances Cook.

Frances Cook was on the AM show and explained the three mistakes made by people which are costing them hundreds of dollars every year.

Mistake number one

Not negotiating over price!

Frances says “Don’t just stay loyal to your power company but look elsewhere to see if you can get a better deal”

She advises people to shop around, for everything; that could be your power company, your internet supplier, or your phone company,” and not just stay loyal to them without questioning whether you may be better off with a competitor. “Start with one company and do your research to see what kind of deals they are offering, if you can ring them and bring it to their attention. They may give you a deal in order to retain you as their customer.

Mistake number two

Leaving your kiwisaver in a default fund.

Those who join kiwisaver and do not specify which fund they want their money in will automatically have their money in a default fund which is invested in conservative funds. The money is safe but the returns are very low meaning by the time those in conservative funds reach 65 their retirement nest egg will be smaller than it would have been if it was invested in balanced or growth funds.

This is applicable to those in New Zealand but it may apply to some abroad depending on how your retirement scheme works.

Mistake number three

Having a bad attitude

I couldn’t quite catch what Frances said was the third mistake but she did say that it was like not learning to swim because you don’t know how to. If you say, “I am not good or not interested with all this financial stuff,” then that kind of attitude will cost you a fortune over a lifetime. There is no excuse for staying ignorant about personal financial matters.

Gaining financial literacy is easy with so much information available online.

Check out Frances Cook’s website www.francescook.co.nz 

www.robertastewart.com