Money may have a different ‘meaning’ for different people, but the fact still remains that you need it to feed, clothe and house yourself as well as support other interests.
Recent studies have revealed the financial concerns of New Zealanders, showing that almost a third of Kiwis worry about the state of their finances. We also have 20 per cent living payday to payday and 58 per cent living in debt, spending more than they earned. For the first time in nearly 3 years, Kiwis’ household net worth has seen a drastic decline.
Many people are becoming more burdened with the uncertainty of being able to pay bills on time, stock the fridge and purchase essentials such as school uniforms.
In last month’s blog we offered some practical tips on reducing spending as you weather an economic downturn. But, once the storm is weathered, keeping on the path to long term financial security should be the goal.
The path to financial security is usually considered more a long-term goal but it is possible for everyone.
Keeping on the straight and narrow when it comes to finances can be challenging because it entails proper planning, diligence and a long-term approach. But we know it’s worth it for the peace of mind of having enough funds for emergencies, being able to cover expenses and living a debt-free life.
Steps to financial security
- Ensure you are saving and investing. Savings should be for unexpected expenses or emergencies (don’t you just love it when the washing machine packs in unexpectedly) or treats such as a holiday. Investing is the long term approach, generally reserved for retirement savings or university funding.
You may be far from retirement age and think this step isn’t necessary just yet but this is a common misconception. The sooner you start saving for your retirement, the better prepared you’ll be to take care of yourself and your family in your golden years and the more comfortable lifestyle you’ll be able to enjoy.
- Set a budget and goals. This is where the planning really comes in. You need to plan your budget and set your goals based on what you want to achieve in the future. What is the ideal amount you’re aiming for to be able to provide for yourself and your family? What expenses can you afford to take on? What adjustments will be necessary to achieve your goals?
You should regularly (at least every year) review this to ensure you’re on track and that there are no new considerations to add to the mix.
- Pay off your debts. And do your absolute best to avoid taking on any more unnecessary debt. Unless it’s a home or business loan, chances are you don’t really need it. The sad truth is that debt doesn’t go away, it just gets bigger and by avoiding payments, you and your credit score will end up in a much worse situation.
- Consult a professional to help you devise the best plan to achieve your goals. People like us are in the business of helping people with their finances and while you may think you already know it all, you might be surprised at what a fresh pair of eyes can recommend.
Things might be tight at the moment, but financial security is possible for everyone and the sooner you’re on the path, the better!