With 2024 in full swing, it’s a great time to start thinking about your New Year’s resolutions. Instead of promising to go to the gym or run a marathon, how about getting your finances in shape?
We’ve all made New Year’s resolutions and not followed through with them. But this year’s going to be different, right? This year, your New Year’s resolutions could be all about getting your money right - here are ten ideas to get you started.
Get debt free
The average Kiwi is $151,000 in debt, according to the New Zealand Herald (July 2023). While a lot of this is mortgage debt, many Kiwis also have personal loans, car loans, credit cards, and payday loans, many with restrictive terms and high interest rates.
Paying this personal debt off quickly is a great way to improve your financial future in 2024.
Save a rainy day fund
FSC research has shown almost 1.5 million Kiwis couldn’t access $5,000 within a week without going into debt if they needed to.
This means that when something unexpected happens that costs money, such as a car accident or family emergency, worrying about how you'll be able to afford to get yourself or your family through is something many Kiwis experience.
Saving an emergency fund equal to 3 months of your salary after tax is a good goal to aim for way to ensure you're resilient to financial shocks and unexpected events next year.
Start your investment journey
Investing is one of the best ways to earn money on the money you already have.
Although many Kiwis have parents, friends and family members with their own investment experiences, seeking professional financial advice from a registered financial adviser ensures you're getting the right information.
You can also get more informed by reading materials that accompany the type of investment such as the Product Disclosure Statement, the provider’s or investing platform's website and articles on investing generally explaining what options are out there and what the different terms mean.
Depending on the type of investment, some are designed to be long term to see their funds and investments grow over 10 - 15 years and others can be suitable as a more short term investment, for example if you need cash to buy a house in the next five years. A registered financial adviser can help you decide what investment approach or product would be best for you.
Although you may not feel ready to start investing yet, finding out how it works and what would work best for you is a great starting point.
Set goals
It’s great to want to improve your financial situation, but intent only goes so far. Financial wellbeing is something that people work on everyday.
But the only way anything will actually change is if you set specific, realistic goals and make a plan to achieve them, such as a goal amount in savings and setting aside a certain amount each pay day to achieve that goal.
Find out how your brain works
There are many budgeting tools, methods and theories out there, all made to fit different types of thinking. Experiment and figure out what works for you - do you like setting an allowance out for yourself each week? Or does setting yourself a limit and only using cash make you more mindful of your spending?
Stamp out bad habits
We all have bad financial habits, from paying membership fees to gyms you don't go to regularly, subscribing to streaming services that you don't watch or ordering delivery food a little too often.
The extra time over the New Year is a gift, so there’s no time like the present to have a close look at your bank transactions, identify your bad habits and stamp them out (or minimise them).
Create a budget
A budget is a great way to start understanding and controlling your money. Seeing how much you earn versus how much you need to pay in bills and necessities will give you how much is left over to save for both goals (like a holiday and a house), large upcoming expenses, and to put into an emergency fund.
It'll also help with seeing how much you really can spend on non-essentials and fun.
Set future you up for good
It’s so easy to think about right now. Many of us can't picture what our lives will be like in 10 years time, let alone when we retire.
KiwiSaver is your future you's account, and although you may not be able to picture what your ideal retirement will be, you are able to plan for how much you will have in your KiwiSaver. There are different types of funds you can be in that will aim for different levels of return. What kind of fund works best for you also depends on how much time you have before you need to use it.
Have a look at some KiwiSaver calculators and speak to your KiwiSaver provider to see if your KiwiSaver is working for you.
Assess your protection against tough times
Insurance may not be top of your mind coming into summer, but the fact is, around 70% of Kiwis are underinsured (FSC 'Taking Cover' research report, July 2022), leaving them financially vulnerable. What this means that many Kiwis are not protected for tough times, such as losing a job, damage from extreme weather event or having a health scare.
Think about what is most important to you, such as your health, home and loved ones and whether you're comfortable with the level of protection around the things that matter the most to you.
Invest in financial knowledge
There is no investment as powerful as knowledge. Find out how you like to learn - is it reading a book, listening to a podcast or watching videos?
Take the time to learn about money and plan your financial future and how to prepare for the next stage in life and financial independence.
For a more personalised and comprehensive session about your finances, talk to a registered financial adviser or services such as MoneyTalks.
Disclaimer:
This ‘Ten financial New Year's resolutions’ blog is general information only. The views and opinions expressed do not necessarily reflect those of the FSC. It is not intended to constitute legal or financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted registered financial adviser, legal or other professional advice.
The names of any third parties are additional resources that you access at your own risk and the FSC takes no responsibility for any third party content.
The FSC and its employees make no express or implied representations or give any warranties regarding this blog, and we accept no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in this blog.
January 2024.
