Make 2015 the year you turn your money habits around
Starting the New Year off with a plan to manage your money is what NZCU Baywide suggests Kiwis do as 2015 quickly approaches. The local credit union has six Top Tips that can help people get ‘financially fit’ and make their financial dreams and goals more achievable.
Live off less than what you earn
If you are living pay-day to pay-day and spending every cent of your wage it is going to be very difficult, if not impossible, to ever get ahead.
Perhaps, you have become complacent to the old saying “the more you earn, the more you spend” when in reality it should be “the more you earn, the more you save”.
Aim to save at least 10 percent of your wage and adjust your spending accordingly, it won’t take long for you to see your savings grow and you can then take pride in what you are achieving.
Hide it away
Seeing how quickly your savings accumulate and watching them grow is great motivation, however, you don’t want to be easily tempted into dipping in here and there.
The harder your funds are to access the easier it is to save. Long-term saving retirement schemes, such as KiwiSaver, work incredibly well. Your contribution is taken directly out of your wage - you don’t see it or even get a chance to spend it in your head. You can also have funds transferred automatically from your main account into a savings account. Hide your savings, make it difficult to access and watch it grow!
Set financial goals and live by them
When would you like to own your own home? Do you plan on travelling at some stage? What age would you like to retire by? Although, they may seem like dreams for the distant future, to make these a reality it’s important to set a plan in place now.
Having clear goals in mind means you always have an objective for your finances. Write them down, review them often and verbally confirm them. When you are tempted into buying unnecessary items, instead of saying “I really want it, but I can’t afford it” say “I could buy it, but I would rather save to buy our first home”.
When life gets in the way…
In addition to savings, you need to have a backup plan for when the unexpected happens.
The car breaks down, your beloved pet gets sick or you have to travel overseas for a family emergency. Events like this will wreak havoc with your savings and have the potential to throw your budget and financial goals out the window.
The best way to ensure you get through these times is to prepare. In addition to your savings that are locked away for future goals you also need some ‘buffer’ funds. Again, it would be best to have these automatically debited from your account on payday and they can be stored in a savings account.
Do your homework
Spend some time researching bank’s interest rates on their savings accounts. If you have a high-interest bearing account set up to put regular savings into, your nest egg will grow faster.
And if you’re buying a property for the first time, saving with a credit union might mean you’ll get that dream home sooner, as those who qualify can receive a home loan with little or even no deposit.
Don’t spend money that doesn’t belong to you
Credit cards and overdrafts can be very useful, particularly for emergencies or overseas travel. However, when it comes to everyday spending you should avoid using your credit cards and instead use your debit/eftpos card or even better, cash.
When you use your credit card you are not spending your own money, and even with the best intentions of paying it back, deep down your subconscious knows this and therefore you’ll find it a lot easier and less painful than spending your own hard-earned cash.
Leave the credit cards at home and use your eftpos, or even better, withdraw the exact amount of cash out that you need and leave all of your cards at home. If it’s not on hand, you can’t be tempted to spend money that you don’t actually have.
By creating new savings habits, creating a plan and keeping the above tips in mind, you’ll be better placed to achieve your financial goals in 2015 and beyond.
For more information please phone Sarah Thornton, PR ink 027 354 7747Top