We’ve all watched or heard of an episode of a weekend home makeover show that makes it look easy to totally transform your home. Once the family involved is whisked away to a beautiful travel destination, the team gets to work making large jobs seem like they can be accomplished in a fraction of the time they actually take. It’s not until the final pan-away shot that you see the sea of people that worked to make that patio, contemplation garden and kid’s jungle gym possible.

The truth is, it’s the same concept when you seek financial advice. Except perhaps the beautiful travel destination during the process. We’ll get to seeking advice shortly but first we’ll look at the motivation behind doing a DIY renovation on your finances.

One night, you can’t sleep, you’re motivated and you’re thinking of ways to get out of a financial rut, how to pay down that slowly-reducing mortgage faster, wanting to find out if investment properties in Queensland are over-valued, wondering if European markets are affecting your superannuation (Am I in the Balanced option? Does that have many international shares?), trying to get some more zeros on your bank balance and avoiding a credit card bill like you received at the end of last January. You buy the Financial Review, the latest money magazine and check out the website for the money guy you saw on TV last week.

This is where it gets interesting.

With a swag of ideas from each of these sources, you decide to renovate your financial garden, setting forth with the gusto of Jamie Durie and a pitchfork. The only problem is that there are a few financial “storm water pipes” and “underground electricity cables” to avoid as well as areas where you will want to get “council approval” before proceeding. Let’s have a look at 6 common financial DIY mistakes to avoid.

1. Superannuation contributions

A little known statistic released by the ATO is that 70,072 people are expected to exceed one of the superannuation contribution caps as at the last financial year. With a penalty interest rate on contributions of 46.5%, the implications of overlooking the current caps are significant. Proposed changes to the cap, the introduction of the bring-it-forward rule, employer super guarantee contributions, Government Co-contributions, recontribution of funds and other considerations all make this an area where mistakes are easy to make.

Used wisely, a solid superannuation contribution strategy can boost your super balance, minimise your income tax and help out the beneficiaries of your estate. A worthy area to explore with the help of a trained professional.

2. Saving for your child’s schooling

Here is a mistake made by parents, one of many they can potentially make. If you’re single, you may like to either take mental notes or skip to the next section. Saving for your child’s education costs is often thought of as simply opening a bank account in your child’s name (or in trust for your child) and depositing funds from their grandparents or as you have extra funds available. Some mistakes in this area include the following:

• Not considering the tax implications of your investment choices i.e. who’s name the investment will be held in, capital gains tax considerations, ownership issues etc.
• Strings attached. An area that is often overlooked is whether your child will still receive funds saved for their university costs if they do not go to university. Should your child still receive a lump sum?
• Planning to fund school fees only. Another area overlooked is the additional costs for study. School books, uniforms, extra-curricular activities & excursions all add to the total amount needed.
• Not considering your options. Forgetting to consider whether paying more off your mortgage, buying an education or investment bond, starting a savings plan or many other strategies may be appropriate to your unique situation can cost you thousands.
• Over-estimating your long-term discipline to save. Without a coach, teams don’t perform. Without support, habits are harder to break and harder to form. It is no different with saving. Unless you often wake up with an extra $20,000 in your bank account and wonder how you must have saved it (rather than having a low balance and wondering where you spent it), you probably need a plan, an adviser and a solid set of habits to fund your longer-term goals.
• Not knowing  all the options – the government has set up assistance in the form of the Education Tax Rebate. It was found $200 million went unclaimed last year

With the reinforcement of a skilled adviser, motivated to see you achieve your dreams, you have a greater potential to help fund your child’s education costs as they grow, achieve and excel.

3. Having a short-term mind vs saving for retirement

You may have heard the Woody Allen quote that life is what happens when you are busy making plans. On the flip-side, not planning and living totally spontaneously brings about a short-term mindset that will not benefit you in when you stop working. This brings us to retirement, the golden years when you will be more motivated by a $150,000 Winnebago than a $8,000 Vespa. A common mistake in this area is thinking that 9% or 12% superannuation contributions will be enough. With the help of your adviser, you may find out that you need $2,000,000 in order to fund your campervan, visit Norway and continue to engage in your social circle. This is not the area where you want to rely on a guess or happenstance.

This all brings us back to the reason that you would look to meet with a financial adviser or attend an information evening. The benefits of having someone to come alongside you, look at where you stand financially, help you plan using the latest strategies and work with your current accountant is almost priceless.

By Rich Peterson