Smart ways to manage your money

Do your finances need some gold dust sprinkled on them?

Here at Canstar we’re always discussing smart ways to manage your money. It’s our favourite sport. There are some very simple ways to boost your personal finances quickly. Here are my top gold dust tips for Kiwis:

  • The credit card gold dust trick: I put my ASB Gold Card on the kitchen scales and it weighs 5 grams. The same amount of gold dust would cost just over US$200.  There are two ways your credit card could be worth its weight in gold, quite literally. One would be to sign up for a credit card rewards scheme, which over the years will return you hundreds of dollars if you’re tactical about its use. The other would be to cut it up and save on the interest payments.  Visa and MasterCard debit cards are worth their weight in gold for the money you’ll save over time. Quitting paying interest is one of the smartest personal finance moves you can make.
  • The KiwiSaver gold dust trick: Half and hour’s work can make you hundreds of thousands of dollars. It’s quite true. Print off the documentation and join KiwiSaver today you’ll soon have thousands of dollars in your KiwiSaver. The average KiwiSaver balance is over $8,000, of which a good proportion came from the government, employers and investment growth. A 25-year-old earning $50,000 and paying the minimum into KiwiSaver will have $297,745 to retire on. That’s huge.
  • The big “five hundy”. As our friends at Sorted say, don’t forget your “Big Five Hundy”. That’s the $521 dollars the government gives you for free every year if you put at least $21 a week into your KiwiSaver. Be honest, you probably fritter $21 a week away anyway.
  • Buying your own palace. Owning your own home is a really great way to get ahead. Instead of paying dead rent money to the landlord, put it towards your own home. In the early years the rent and mortgage payments will be little different. But slowly the home will go up in value. You’ll have built up tens or even hundreds of thousands of dollars of your own money in that home that you’d never have if you stayed renting. What’s more, you’ll be able to keep pets, stick Blue-Tak on your walls, and not put up with intrusive inspections.
  • Getting smart with revolving credit.  In the right hands revolving credit is gold dust. How it works is that you have a huge overdraft instead of a traditional mortgage. Your wages or salary is paid straight into the mortgage account, reducing the outstanding balance at the beginning of each pay month.  You pay less interest in the first days of the month because you owe less. As you withdraw your monthly expenses the outstanding balance slides up. Even so you’ve saved a chunk of interest for the month. This approach can save you thousands of dollars in interest payments. That is, providing you’re not someone whose tempted to dip in to the mortgage to buy this and that.

We know it’s easy to think negatively about debt, saving, and even homeownership.  Thinking “I can do this” is the very first sprinkling of gold dust.

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