Tips to help you fly financially in 2014

Keep mortgages to reasonable levels: Too much debt can cripple your lifestyle and expose you to excessive risk. A huge mortgage leaving you subsisting rather than living makes no sense. When thing go wrong, people with excessive debt all too often lose their homes in mortgagee sales.

Don't wear rose-coloured glasses when looking at anything financial: Make a list of pros and cons before proceeding - buying a house, car, boat - anything - and then be pragmatic, hard-nosed and use common sense.
Scams: Still heaps out there, especially by email - sometimes purporting to be from your bank. Be very wary. Even lawyers have been done for hundreds of thousands. Don't get caught.

Higher the return higher the risk: There is no free ride.
Putting your finances in the "too hard basket": Inaction will cost you in the long run.
"I'm too busy": Another form of procrastination that carries the same costs.

Invest in boom, despair in gloom: Be contrarian, and don't let fear or greed make your decisions for you. Learn about behavioural finance.

Avoiding life and income protection insurances: Pay attention to insurance. Do you know what your biggest asset is? Clue - for most of us, it's not our house.
Trying too hard to avoid taxes and getting your children a student allowance: Don't outwit yourself with complex structures and trusts, you will spend a lot of money, and the IRD and Winz are not stupid.

You can consume capital in retirement: Most of us will gradually have to consume our savings in retirement, especially if we live to a ripe old age. It's okay to do so, but get some advice to ensure you're not spending it too fast. Overall, financial checkups annually may be cheap in the long run.

Is property better than shares?: No perfect investment exists, so rather invest in bonds, property and shares.
Diversification: Unless you have a 100 per cent reliable crystal ball, diversify widely.
Buy quality: Applies to everything, and especially investments.
No emergency cash: No one will bail you out if you are ill or lose your job - keep three to six months' income in readily available funds, but not in your bank.
Retiring too soon: You don't have to retire at age 65 and many of us can't afford to. Don't stop work until you have done a full financial review and know where your income will come from.

Learn from other people's mistakes: "Some of us learn from other people's mistakes, but the rest of us have to be other people." Zig Ziglar.

Basing too much reliance on the value of your business to fund your retirement: Save a significant amount outside your business.

Waiting for exchange rates to move back to "where they used to be": Why would they? Rather do half now and half later.
Going into a retirement village and losing fallback options: Not too soon, and watch out for 25 per cent exit fees if you don't like it.
Failing to work your money harder: An extra 2 per cent a year return over and above the bank can be huge: $100,000 x 2per cent = $2000 x 25 years = $50,000.

Being too cynical and not trusting or seeking advice: Research tells us that well over 50 per cent of New Zealanders take advice from family and friends, but not everyone in New Zealand has been successful, so one wonders what sort of advice some people might be getting. Conversely, even the successful sometimes can see only what worked for them, and perhaps not what might work for you. No one can give you good advice unless they can ferret out all the facts pertaining to your assets, hopes, dreams and goals. This takes practice and skill. Who is giving you advice or encouragement? Why would they say that? What's in it for them? Have they done well? Are they qualified and experienced?

Know this before you take any financial advice.

Alan Clarke is aithor of Retire Richer - A Practical Guide for Everyone Aged 25-85. He blogs on www.investandretire.co.nz and is an authorised financial adviser whose disclosure statement is available on request and free of charge.