Okay, we realise that you’re probably getting mixed messages. On the one hand there are all those songs telling you to live each day like it’s your last … on the other, the financial money management messages telling you to plan for your future. The sweet spot is, probably, somewhere in between watching every cent and frittering away cash like you can print your own money. If you feel like now is the time to get more balance in your relationship with money, then read on, we’re here to help.
Three tips for creating a money management plan
1. Spend your money on what gives you real enjoyment
Right off the bat it’s easy to see this is not a one-size-fits-all piece of advice. My idea of joy might be spending dough on, well, dough and cheese (think takeaway pizza), whereas you might think that’s money down the drain. Likewise, I might pay not to watch sports for which you’d happily buy a season pass. So, ultimately, this tip means you need to think about what really makes you happy and, therefore, what is worth your hard-earned cash. If you make an honest review of your bank statements, it’s quite likely you can find a bunch of transactions – even if each is small – that didn’t bring you any enjoyment, but which you just happened to pay for in the moment. Think about that really average snack that you had to buy on the way home, when you could have grabbed something equally as average – but substantially cheaper – from your kitchen cupboard. Sure, these sorts of transactions may only cost a few dollars a pop, but they add up relatively quickly.
Also, think about your priorities. If you can afford it, sure, treat yourself to a flashy new car. But, however enjoyable a new set of wheels might be, don’t buy it if you’re right in the middle of making sure you’ve enough money to buy a new home, for example.
2. Consider a bonus savings account
Canstar has written a guide to compound interest to help you understand why this magical financial wonder can be an amazing savings strategy. In a nutshell, compound interest is when you earn interest on top of interest. And you don’t have to do any extra work to get it, other than to exercise some self-control and leave the money in the account.
Currently, we’re in a low-rate environment for savings, which means you won’t experience the full benefits of compound interest, which really ramp up as interest rates increase. But it’s still better to earn something rather than nothing. If you’re interested in opening a bonus savings account and don’t know where to start, Canstar compares savings account providers and products in the market to help you choose.
3. Review your banking and insurance policies
Just as you would when shopping around for products and services, such as cars, TVs and broadband, it pays to do regular comparisons of your financial products, such as insurance policies. As well as being a financial consideration – making sure you’re getting value for money – you also want to make sure that the product still suits you. Depending on what stage of life we’re at, our financial needs change, so it makes sense to continually check that the products you have signed up for are working.
Because we understand how confusing and time-consuming it can be to check the market, we’ve started the leg work for you. Based on surveys from New Zealanders, we’ve collected feedback on how satisfied customers are with providers under the following insurance categories: health insurance, car insurance, home and contents insurance and travel insurance. And, because we know pets are really just another member of the family, we also cover pet insurance providers.
Check out Canstar.co.nz to see all the categories we research and rate. Among the categories, our in-house analysts research, rate and compare a number of key banking product categories, including home loans, credit cards and KiwiSaver accounts.
While this list may seem overwhelming at first, read it over and then try to do one positive money task each day. Creating new positive money habits does take time, so be kind to yourself. But don’t procrastinate, either. Today is as good a day as any to get stuck in. Good luck!