With many New Zealanders now living life on reduced incomes now is a good time to look at spending and what you should be doing with your money, according to leading finance experts, Yes Finance.
A panic induced mistake that people are prone to is to sell property or shares when their values fall. We know this is an error as history shows us that following every downturn is recovery. Even though this present state of affairs is unprecedented recessions are not.
Only sell if circumstances dictate that the extra cash is needed to help you survive this crisis, assets shouldn’t be sold. “Unless your investments are basically defective, it’s mostly better to hold on to them,” advises Yes Finance owner and director, Peter Steel.
Research by the Commission for Financial Capability also found that those surveyed in May and June revealed a staggering 24 per cent had used a credit card, overdraft of borrowed money to buy food or pay expenses because they have run short of money and one in five owed money after missing a payment on a loan. “The earlier you talk to your lender/bank, the better position they will be in to help you deal with your financial situation,” advises Peter.
Getting a mortgage that’s too hard to manage is always a risky move at any time but it is now even more so with the current Covid situation. Losing your job or having your income reduce is tough no matter how big your mortgage is, nevertheless borrowing to the maximum amount generates a massive amount of pressure on yourself to get another job paying at least the same amount, in a crowded job market. “Instead take on a lower mortgage but make repayments as if it was a bigger mortgage, not only will this pay down debt faster but repayments can then be reduced when finances are tight,” advises Peter.
Not everyone is expected to be a financial expert, so don’t be afraid to seek out advice from a trusted financial expert. This is especially true for those between 18 – 35. Research by the Commission for Financial Capability found that young Kiwis who said they kept a close eye on their financial activities dropped from 78 per cent in a March/April survey to 70 per cent by May/June. “We need to help and encourage younger kiwis to work towards a better financial future for themselves,” comments Peter. Yes Finance can provide many options to get you through the difficult times.
Even those these are quite stressful times you still need to remember that you are not alone. Moneytalks is a free financial helpline support from trained financial mentors.
The Sorted website, government-funded and full of information to help you manage your personal finances.