There is nothing worse than carrying on through life and suddenly finding that for some years you have been making some basic mistakes in managing your money that have cost you thousands of dollars. Here are the top five mistakes to avoid:

1. Spending everything you earn. Spending everything you earn now leaves you vulnerable to changes in your income and potentially unable to achieve significant and important goals. Saving doesn’t mean going without; it means being able to spend more, later!
2. Not choosing the most appropriate KiwiSaver fund. The effects of compound returns can lead to massive differences in the final value of a fund at retirement, depending on which investment strategy is chosen. If retirement is a long way off, investing too conservatively may result in disappointing returns; if you are close to retirement, investing too aggressively may result in loss.
3. Not insuring your most valuable asset. You insure your car, your house, your business, your life, but what about your most valuable asset – your future income? Most people earn between $1 million and $2 million during their lifetime. Insure yourself against the possible loss of those potential earnings.
4. Not having a financial buffer. If you have no financial reserves, you may be forced to choose between borrowing money at a high rate of interest, selling assets at a discount for a quick sale, or taking a big drop in your standard of living in response to a sudden change in your circumstances or unexpected expenses.
5. Mixing business finances with personal finances. Business income tends to fluctuate and raiding your business bank accounts for personal spending may leave your business short of funds later. Maintain a constant regular payment to yourself from your business so you can plan both your personal and business finances.