31 Jan Spending and Saving
With a blink of an eye, we are already 1/12th of the way through 2018! Many of us will have made new years resolutions or set goals for 2018. In fact, if you haven’t set any goals for 2018, time to do it now!
A common theme we hear every year from many people is: “I want to save money” or “I want to pay off my debt” – sometimes even more simply “I want to be better with my money”. In our opinion, these are fantastic ambitions to have. However, for something that sounds so simple, it is incredibly difficult for most people to do successfully.
Us Kiwi’s are big spenders. For the past couple of decades, we have tended to spend more than we earn. In fact, between 2001 and 2011 New Zealanders consistently spent more than we earned. While in recent years, as a ‘whole economy’, we are returning to net-savings territory (albeit only just), this is mainly thanks to business savings and government surplus. Us individuals are still spending more than we bring in. How can this be sustainable you ask? In short, it’s probably not.
An article from Interest published back in 2013 suggested that ¼ of New Zealanders would use up their entire savings within a month if they lost their primary income. Interestingly, this phenomenon isn’t restricted to those on lower incomes, many in higher income brackets are in this position also. Put simply, we aren’t putting aside enough of what we earn. Nor are we paying off our debt quick enough.
By global standards, New Zealand’s government debt isn’t all that much of a train wreck at somewhere around $88.5 Billion (compared with, say, the USA, where it has been the cause of a couple of government shutdowns during recent years) – if you ever want to feel better about your credit card bill, check out National Debt Clocks. However, our combined household debt looks a little more dubious at over $250 billion. This is an increase of over 60% compared to a decade ago.
There are thousands of websites dedicated to advice on saving more and making more money. Many of them have some darn good suggestions. However, if there is one thing that in our experience, sets apart those who can save money successfully from those who seem unable to – putting money aside is a habit: pay yourself first, otherwise, eventually, you will be the one going hungry! Every time money comes into your account, squirrel a little bit away into a separate savings account.
Saving money and paying off debt doesn’t mean you have to be a penny-pinching misery, nor does it mean you have to stick to a rigid budget. It does however, take a little discipline and understanding of where your money is going each day/week/month/year. When was the last time you went through your bank statements and credit card statements in detail? It takes very little time to do, but can be rather confronting for many people!
If this is the year that you want to be better with your money, pay some debt off or start saving contact us for a confidential conversation about your money goals.
Have a great February!
