We are all feeling the financial squeeze. Coronavirus and the subsequent economic turndown have us all keeping a closer eye on our wallet and our bottom lines.
Fortunately, there are steps you can take now to help get through these financial hardships, says leading finance experts, Yes Finance.
Step 1: Goals
Think about what you would like to do with your money. Your goal can be as big or as small as you like. The Herald’s Cooking the Books personal finance podcast suggest picking a goal that excites you and makes you happy as that’s what budgeting should be all about.
“Once you have a clear understanding of what you are putting money aside for it makes it a lot simpler to cut out excess spending that is getting in the way of achieving your goal,” advises Yes Finance owner and director, Peter Steel.
Step 2: KiwiSaver
If you have KiwiSaver, you may be anxious about its ups and downs. However, as long as you’re in the right type of fund, feel free to ignore it for a while.
“This is true for the majority of KiwiSaver members unless you plan to use the money to retire or to buy a first home in the next three years,” comments Peter.
If you are planning to retire or buy your first home, have a good to look around for a defensive fund. Check out this FAQs for KiwiSaver members for more information.
Step 3: Incomings and Outgoings
With your budget you need to monitor what’s coming in and what’s going out. “Open up your bank account and write down all the regular bills that you know you have to pay each month and make a note of how much you’re paid each week so that you can balance out the incoming versus outgoing money,” advises Peter. There are a number of different and easy ways to figure it out such as budget apps and excel documents and it’s all about discovering a system that works for you.
You can also try the Sorted Budgeting Tool where you can create multiple budget scenarios and can help you craft your plan.
Step 4: Talk to your Lender/Bank
If you are unable to make repayments on any loans or debts make sure that you talk to your lender or bank right away. Often, they’re willing to make things work with you and your loan as they deal with this kind of thing all the time.
Depending on your situation they could consolidate loans to make repayments more manageable or move you to interest-only payments.
Step 5: Reduce The Pressure
According to research recently released by Sorted, 31% of New Zealanders have resorted to tapping into their savings to pay for the basics and in the May-June period of 2020, 24% of those surveyed missed at least one bill or loan payment. If these statistics are anything to go by, it’s no wonder kiwis are under mounting financial pressure.
There are steps you can take, such as talking to financial experts, to help reduce the financial pressure you are feeling.
Life is unpredictable, so it’s always best to be prepared and careful. By taking the right steps now you can turn a potential financial disaster into a merely a brief setback.