Money Week 2019
Make your money go further and plan for the future
Debtfix knows most people want to get ahead financially but it’s easy to get swept up in the feeling that you always need to buy the newest, most expensive things to keep up with The Jones.
Although it’s difficult, avoid comparing your situation to anyone else’s. Comparison will not only rob you of your joy but also your earnings.
It is important to remember that everything is not always as it seems. Someone with a large home, fancy car and regular overseas holidays may also have an astronomical mortgage, massive personal loans and maxed out credit cards.
Change your outlook on your finances, keep moving forward and do what’s right for your family.
Money Week starts on September 9, 2019 and the theme this year is about looking to the future.
Long-term financial decisions can seem too hard when you're faced with life’s demands and the instant gratification of living in the now, so here Debtfix looks at ways to make your money go further.
Tip 01 - Create a monthly budget
If you’ve never created a budget and let your finances come and go without much foresight, you’re probably not financially prepared for the future.
One unexpected event such as an accident, a vehicle breakdown or an unexpected bill can set you back months.
That’s why a budget is one of the best tools for getting the most out of your money and getting ahead.
It gives you an action plan and a clear picture of where your money ends up each month or week.
Budgeting helps you achieve the goals you’re working towards – whether that’s getting out of debt, saving for retirement, or just trying to keep your shopping bill from exploding.
A tight budget is hard to stick to, so it’s important to be realistic about how much you need.
Simply Budget is part of the Debtfix network and has some fantastic budgeting tools and advice. Other free online tools such as the Live Sorted budgeting tool or pocketsmith.com are great ways to monitor your spending.
Once you know where your money is going, you can then start to make changes, based on what you can afford.
Tip 02 - Start paying off debt
Even if you are scraping by from pay day to pay day, making small repayments to any debt you may have is crucial for your long-term financial freedom.
Whether it is credit cards, student loans, mortgages or car loans, it is important to be courageous and tackle your debt head on.
Start with the high interest loans first.
If you have lots of loans to repay, it’s best if you focus on repaying a single debt with the highest rate of interest, first.
Keep the rest at the minimum payment, directing all extra money to eliminating one debt at a time.
Debtfix offers managed processes that stop you from drowning in debt and help you regain control of your finances, while ensuring debt payments are affordable.
Tip 03 - Check you’re in the best KiwiSaver scheme
KiwiSaver is great for getting ahead, but if it’s not set up correctly, your results could be tens of thousands of dollars less.
Do you know how well your KiwiSaver is working for you?
It’s important to know what KiwiSaver scheme you are enrolled in, what are its returns and what are its fees.
If you were automatically enrolled by your employer, you may have been provisionally allocated to your employer's chosen scheme or to a default scheme.
Typically, a default KiwiSaver scheme provides lower rates of return.
You can choose to stay in that scheme or change to a different one.
The four main KiwiSaver schemes are default, conservative, balanced and aggressive funds. The level of risk increases from conservative to aggressive but so does the potential for greater returns.
The government will give you 50 cents for every dollar you put in – that’s up to $521 each year.
If you’re an employee and put in three per cent of your salary, your boss will match it with another three per cent.
Make sure you’re contributing at least $1,043 each year to get the government money, and at least three per cent to get your employer’s contribution.
Find out how much you put in from your payslip or at kiwisaver.govt.nz.
When looking at KiwiSaver fees it is important to ask, what am I getting for my money? Is the provider doing more to manage the fund and getting better results?
Some funds have higher fees because they are more actively managed and that can sometimes pay off in higher returns.
Sorted have a KiwiSaver Fund finder tool that helps you select the best fund for your current situation.
Tip 04 - Make a will
A staggering 50 per cent of New Zealanders do not have a will.
Even if you have personal debt, it’s crucial you make a will to protect your family.
If you die without a will, all your assets do not automatically go to your family. The government use a formula to divide up the assets.
You can get information about preparing a will here or contact a lawyer to draw one up for you.
Tip 05 - Talk about your money situation
The team at Debtfix knows talking about money is never easy, even with your loved ones.
But part of preparing for your financial future is to also be willing to openly discuss your individual and shared goals.
Not talking about money can be a source of stress, anxiety, and unnecessary problems for many families.
Personal finances are intertwined – how we handle money affects those around us, and vice versa.
So, these honest financial conversations are some of the most important ones to have.
If you have children, the more you talk with them about managing money, budgeting and investing and the pitfalls of not planning, is a great way to help them towards financial freedom.
If you would like confidential, non-judgemental, free advice about the information discussed in this article you can contact Debtfix at helpline@debtfix.co.nz or 0800 DEBT 101.