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Your financial check-up

With high inflation, rising interest rates and rumours of a looming recession, now can be a great time to give your finances a much-needed check-up. Here are seven things to…

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22 September 2023

Follow our seven-step guide to help you achieve your financial goals.

With inflation, and interest rates remaining high, now is as good a time as ever to give your finances a much-needed check-up. Here are seven things to think about. 

Create a budget 

Budgeting lets you create a plan for your money. It makes sure you’ll have enough for your needs and goals. And if you’ve been to the supermarkets of late, you know the difference that a good budget can make in periods of high-inflation.

Budgeting helps you keep track of where your money is going: it’s all about being mindful with your spending. On this note, we’ve found a great step-by-step budget process from My Money Coach. Have a read and sure you review your budget often.  


Review your KiwiSaver 

Many of us think our retirement is sorted because we ticked the box to sign up to KiwiSaver scheme. Unfortunately, this can mean you’re not in the right type of KiwiSaver fund for your situation. And if so, you’re unlikely to get the retirement you expect or deserve. But don’t worry: you’re in the same boat as 50% of all New Zealanders, and there’s a way to fix it!

Have a look at your KiwiSaver fund selection. Does it match your objectives and your risk tolerance? What will your KiwiSaver give you for your retirement or first home? Do you need to change your contribution rates?

Kōura has a unique set of tools to help you understand your KiwiSaver account and make sure it suits your needs.  Review your KiwiSaver plan here. 

Plan for an emergency 

Did you know that one in four Kiwis don’t have any savings to fall back on, and 35% have less than $1,000 in their emergency fund(1)? Unfortunately, if they lost their job or were hit by a sudden expense, they would need to go into debt.

Saving is challenging, especially with the rising cost of living, and setting up an emergency fund isn’t easy. But if you ever need it, it will be an absolute lifesaver. We recommend having at least a month’s worth of expenses saved and accessible for emergencies. 

The best place for those savings is a bank account or term deposit: they’ll be accessible at any point in time and the value won’t change with the markets. 


Reassess your mortgage 

If you have a mortgage, when was the last time that you reviewed it? Since early 2021, mortgage rates have been increasing rapidlyThis is because the Reserve Bank has been trying to rein in inflation, and continues to increase the official cash rate which has led to banks increasing mortgage interest rates. The question is, has the Reserve Bank done enough in its fight against inflation, or are we going to continue to see higher interest rates for a while longer. 

As a result, if your mortgage rate is due to expire soon, you may want to take a closer look at the available rates and how that may impact your budget. Of course, rate levels are just one of the factors to consider: you also need to think about how long a term to choose.

For this and other questions, we recommend you talk to a mortgage adviser. They’ll be able to give you a look at the best options for you. 


Look at debt and savings 

One of the biggest money-makers for a bank is apathy. Their ultimate customer is someone with a mortgage, a large everyday bank balance, and a credit card.  

In reviewing your debts and savings, think about what each piece of debt is costing you. How does it compare to any savings/investments you have? At the time of this writing (September 2023), a credit card will incur an interest rate of around 10-20% per annum(2). A mortgage will have an interest rate of 6-9% per annum(3). A savings account will earn you between 2.50-5.50%.(4) 

If you can, it might be a good idea to consolidate all of your debts under your mortgage. If you have savings and a mortgage, you might find you’re better off paying down the mortgage. You’ll save more in interest than you’ll earn in interest from your savings.


Review some of your household bills 

You might be shocked at how much you can save by checking some of your annual power bills.  Changing your broadband provider can potentially save you hundreds per year. And you could save some more money if you review your power provider, too.  
If you’re worried about the hassle, don’t be. Power and broadband are extremely easy to switch: it can be done from your couch in a few minutes. And you could divert the savings towards your retirement or emergency fund. 

To help you, we suggest you review your broadband using Broadband Compare, and Powerswitch for finding the most affordable power provider in your area.


Talk about it 

Money is a taboo subject for many. Having open and honest conversations about money helps us set and achieve our goals.

By talking about your financial check-up with your partner, for example, you can create a shared understanding of your financial goals, needs, and priorities. This can help you make informed decisions together, and ensure that you're both on the same page when it comes to managing your money.

Plus, having these conversations can also help you stay accountable and motivated to reach your financial goals. When you share your progress with your partner, you can celebrate your successes together and work together to overcome any obstacles or setbacks.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.