What you need to know as we head into 2019

Say we want to really get it together in 2019. Where should we start?

Get an up to date Will – It’s estimated that 50% of Kiwis don’t have one, but it’s one of those documents everyone has to pull out sooner or later. Make it easy for those you care about. More on that here.

  • Start saving first, spending second – Most people spend spend spend, and try and save after. This method is deeply flawed. If you set an (achievable) goal of, say, $25 per week, and put that away first, you have the freedom of spending the rest, while quietly building a nest egg.

  • Figure out where your KiwiSaver money is, and make sure it’s the right place. So many New Zealanders don’t know which company is looking after their KiwiSaver money, let alone what kind of fund it’s in. Considering this is the ticket to many people’s first home, and/or their retirement plan, it deserves a lot more attention than most people give. More on that here.

What are some easy mistakes that can be avoided?

  • Borrowing money the wrong way – people often use credit cards and pay high interest rates, when interest rates on mortgages are a quarter of the price.

  • Putting things on hire purchase (or lay-buy) that you simply don’t need.

  • Replacing/ upgrading something for no real reason (ie your phone or car)

  • Making risky investment decisions (shares, KiwiSaver, business ventures).

How can you start savings when you don’t have much money left at the end of the week?

I know you hear it all the time - But making a budget is the best way to figure out exactly where the money is going. Obviously, there are things you can’t cut, like rent, fuel, food, but if you do it accurately you will see how much is being spent on funding your lifestyle – Nights out, unused subscriptions, new clothes and more. Once you’ve identified these you can start cutting what you don’t truly need. Look at how much is left over, and set up an automatic payment to put a feasible amount (eg $50 per week) into savings for future wealth creation.

When’s a good time to get Insurance?

Get it before you need it. We can’t predict what happens in our lives. It’s about asking quality questions to make sure you can survive financial hardship in unforeseen circumstances;

  • If your car got stolen and it’s under finance, what are the implications? You don’t have a car anymore, but you still owe money on it.

  • If you get sick and can’t work, your income will simply stop. How will you pay your bills? ACC won’t help unless it’s an injury.

  • If you’ve got a mortgage with your partner and they’re killed in a car accident tomorrow, can you afford to keep paying it off?

  • An effective insurance strategy can make sure you’re covered for all of this. More on that here.

Why should I get financial advice?

The same reason a professional golfer still has a coach – To help improve weaknesses they’re not aware of. An adviser will open your eyes on the areas that are important to you. Financial literacy is not something we’re taught at school, it’s something we’re expected to learn along the way. Having a coach to guide you helps get you to where you’re trying to be a lot easier. Not to mention, it’s free.

Jessica Smee