1. Clear all your high interest debt
If you put your Christmas gifts on the credit card, pay it off as quickly as you can! Set money aside each payday for your normal bills (food, power etc) and put as much as you can of the rest of your pay onto the credit card to clear it until it has a zero balance.
If you struggle to manage the bills that accumulate on your credit card, break the cycle – take your credit card out of your wallet and put it in your bedside cabinet for a few months. That will stop impulse buying when you are out shopping. When you have broken the habit, you can put use it again, but use it only for planned spending and monitor the amount accruing on your bill each month.
2. Review your expenses
Are you paying too much for your power?
Check that out at http://www.whatsmynumber.org.nz/
Are you on the best phone/mobile/internet deal? Ring your provider to ask, and maybe ring a competitor.
How much insurance do you have – is it the right type and are the amounts right? Get advice on this as your needs change as you move through life.
How many trips to you make to the supermarket each week and how much do you spend on groceries?
Start making one trip a week to the supermarket and your grocery bill should drop.
Keep bread and milk money in a jar in the cupboard and drop into the dairy for these if you get caught short mid week.
3. Is your KiwiSaver the right one for you?
Have you taken enough investment risk, given how many years you have to retirement, or have you taken too much? Is your fund manager providing returns that are comparative with their peers? For a lot of Kiwis, KiwiSaver is going to be the foundation of their retirement planning so it is worth a bit of time and effort to make sure that you are on the right path.
4. Save a little bit – little can be powerful
In 2016, put a little bit extra into your mortgage each payday, or set a little bit of money aside in a high interest savings account or a long term investment.
$25 a week, invested at a net return of 5% (a balanced fund) will be worth $43,630 in 20 years time.
Similarly, if you have a mortgage of $250,000 taken at 6% over 20 years, paying an additional $25 a week onto the mortgage will save you $20,774 in interest and reduce the term of the mortgage by 2 years.
5. Make a budget
I know that this is a tough one for a lot of people, but this is really the powerhouse of creating wealth. It is a wonder of the modern world that money, if not closely supervised, just evaporates into thin air! Once you have done the work to get your budget set up, it is easy to maintain it going forward and you just need to review your expenses once a year.
This is an excellent website if you are looking for some tips on how to get started:
We also recommend the Sorted website as the source of good budgeting material https://www.sorted.org.nz/get-sorted
Have a FABULOUS 2016! Make this a year of positive change.