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5 Financial Mistakes That Keep Oil And Gas Veterans Flying Out Longer Than They Planned!

5 financial mistakes that keep oil and gas veterans flying out longer than they planned!

The only “lifestyle” choice you make deciding to work in a remote location is to sacrifice your lifestyle today to live on your own terms in the future. But many people make financial mistakes that will keep them flying out for years longer than they’d hoped. What are those mistakes?

Mike Bennett started his career in the mining industry as an instrumentation and electrical guy. He worked on projects around the world and knows exactly what it’s like to dream of the day you can stay home and do what you want. Today, as a Perth-based financial planner, he helps his clients do just that.

Along my way from resources professional to financial planner, I’ve seen all the traps that can tempt girls and guys working long hours in places they don’t want to be. I saw them first when they were offered to me, often on site when I was at my most vulnerable. These days, I see them when clients come to me to ask what I think (perfect timing) or when they need help picking up the pieces (bad timing).

Here are the biggest five financial pitfalls I’ve seen people in the industry get caught by.

1. Falling for get rich quick schemes

You don’t have to be working in oil and gas long before someone offers you an unmissable opportunity in Gold Coast property, timeshare investments or a tax minimisation scheme the ATO will never cotton onto. (Think Budplan.)

Wealth creation isn’t about silver bullets and offers that are too good to be true. You can’t just copy what worked for someone else. Wealth creation happens when you have a strategy to invest surplus income or to use equity to buy:

  1. The right investments
  2. At the right time
  3. Within the right tax structures.

If you’re worried you’re being offered something that isn’t real, run it through this test and then get advice:

  1. Does the salesman have only one thing to sell?
  2. Is the salesman paid on commission rather than on whether the investment works out for you?

If either of these things is true, the salesman has no incentive to match you to an investment that is right for you. They win whatever happens to you.

Another sign is the “30 June deadline” used too close to 30 June for you to have time to reflect or get advice. Anyone rushing you into a last minute decision might be playing on the fact you aren’t prepared and haven’t developed a robust strategy.

The alternative is a financial coach who is going to work with you to create wealth over the long-term. A legitimate wealth coach has no desire to fly into the sunset before the ink’s dried on your signature.

2. Getting into the wrong kind of debt or tax minimisation scheme

Debt

Borrowing money to make an investment can be very powerful however investments that involve debt should always ring alarm bells. Debt definitely magnifies a potential return, but it severely amplifies the prospect of a bad outcome, which is the reason for extreme caution.

We advise many clients to borrow, but only as part of a well-conceived plan that takes into account their individual circumstances and that allows for the risk. Going into debt is not something you should do because someone blew in with a brochure and a supposedly time-sensitive offer.

Inappropriate focus on tax minimisation

Your salary comes at a high personal cost, so you feel entitled to keep as much of it as legally possible. But it’s a mistake to concentrate on minimising tax when you’d have more money in the end if you just paid the full amount of tax, saved your money and invested conservatively.

Beating the tax man isn’t necessarily winning the game and attempts at tax minimisation have destroyed many families financial plans.

Again, it’s about having a plan with goals and mapping your progress towards your objective rather than making snap decisions because you hate the idea of the ATO having any more than you can avoid.

3. Buying at the top of the market

Someone has to buy at the top of the market; otherwise, it wouldn’t be a market. But it doesn’t have to be you.

Unfortunately, you’re fighting human nature, which is to pile into a climbing investment, terrified by the fear of missing out. That’s where bubbles come from. Buying low, getting in before the herd, is harder. (Google 10 cognitive biases that can lead to investment mistakes)

You can maximise your chances of buying low and selling high by getting help from someone whose decisions aren’t clouded by the emotional considerations that are driving your thinking. That doesn’t mean they don’t share your goals—financial freedom, affluent retirement—but it means they’ve got the distance to help assess whether the strategy will get you there.

4. Failing to plan

My journey from the mine site to financial planning started in a wet mess in the Goldfields. I was having a beer after work and checking the share prices in the paper. One of the underground jumbo drivers leant over and said, “I wish I was interested in that at your age. I’ve earned a thousand a day for 10 years and have nothing to show for it. I’m just getting into that stuff now”

He wasn’t alone then, and he’s not alone now. When you’re young, healthy and earning good money, it’s easy to leave planning for retirement for some other day.

And maybe you can, but you’ll never catch up with the young ones who started putting it away at the beginning. That’s the nature of good investing and compound interest. It’s also what leads older people into risky strategies as they clutch at anything that might make up for lost time.

Nobody wants to be a downer, but there’s no hiding from the maths. The sooner you start putting money away in a consistent, planned way, the further ahead you’re going to be when the time comes.

So if you find yourself on an extravagant holiday or straddling a new jetski or wishing you were, it’s time to ask whether it’s time to be thinking further ahead.

5.  Knee-jerk reactions late in the day

Rushing into debt

Realising they’ve left their wealth creation run late in the day leads to bad decisions about debt. People in the last five years of their career are particularly susceptible to borrowing to buy risky investments they hope will top up their nest egg before it’s too late.

Not only can the investment turning bad wipe out the whole nest egg, but there are also serious mental health implications to being buried under loans with no time to dig.

If you’re in the last five years of your career, it may be time to think about wiping out remaining debt, not getting into more.

Moving into self-managed super fund (SMSF)

Another knee-jerk reaction we see happening late in the day is moving superannuation into an SMSF and making their own investment decisions.

We’ve seen this more and more in referrals from accountants whose clients need SMSF remediation work. People don’t realise until it’s too late that they don’t have the resources to manage their vital and finite nest egg.

Most would have been better off leaving their super in the original fund rather than trying to self manage it as a late in the day show of willingness to pay attention to their finances.

So how do you avoid these mistakes?

To be blunt, working long hours in the resource industry isn’t conducive to making the best investment decisions, especially when you don’t have emotional distance from the decisions you’re making.

Having lived the life of high income, remote working environments and wanting to get ahead myself, the best advice I can give you is to get some help. It’s okay for you not to be an expert in financial matters. It’s not ok to suddenly take ownership and end up jumping into get rich quick schemes or chopping and changing your strategy.

Don’t hesitate to contact us to discuss your thoughts, ideas or concerns on 08 9274 2888.

If you’d like to do some more reading first, you may be interested in these thought pieces:

For a short video on BWG and where it all began you click on this link to watch this clip.

The information and articles as well as the blogs provided on this page are general information/advice only and are not personal advice. The information/advice does not take into account any personal objectives, needs and situations of any individual/s as such prior to making any decisions regarding your investment strategy or acquiring a financial product, you should seek personal financial advice from an authorised adviser. The appropriateness of the information/advice should be considered on an individual basis and advice sought as to suitability. Past performance is not a reliable indicator of future performance
Bennett Wealth Group is a Corporate Authorised Representative of Bennett Financial Services Pty Ltd (ABN 26 142 752 225) Bennett Financial Services Pty Ltd holds an Australian Financial Services Licence and Australian Credit Licence No. 357917.

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