Economics 101:Personal Finance

 In the quest to maintain…we must often take a hard look at how we live….Wenston DeSue

Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access, purpose and often times, power.  These articles represent aspects that affect the business of real estate. 

Two budgeting experts Newshub spoke to said the level of price hikes means a growing number of Kiwis cannot afford the essentials. 

Many had taken on high-interest debt and bought multiple loans now, paid off later, that they struggled to keep up with and repay.

Sam Farquhar, services coordinator at Henderson Budget Service and Nicola Eccleton, social inclusion manager at Good Shepherd, suggest five ways Kiwis can take control of their money as prices rise.

1. Review expenses 

Good money management starts with knowing where the money is going. 

Once people know how much they’re spending, they can make changes, Nicola Eccleton said.

“Information is power…if you can go through your returns and figure out what’s negotiable and what’s not and how you can reduce some of those costs, you’ll feel better,” Eccleton said. .

A budget helps people plan where their money is going. It shows the money coming in each month (income), the money going out (expenses), and the amount left for expenses and savings.

“Having a budget is huge…the way to start is to go through your bank statements (ideally 3 months) and figure out where you stand,” Eccleton added.

2. Set a goal

Setting even a small financial goal can be empowering.

It provides a reason to save and something to look forward to.

“It could be as simple as having $15 at the end of every week and after three months we’re off for one night,” Eccleton said.

Rather than feeling guilty for saying “no,” parents of children can set aside “discretionary money” (e.g. $5 or $10 a week) and involve them in how that money will be spent. . 

“The important thing to do is not to create a situation where there’s a ‘deficiency thought,’ but to frame things as a ‘choice,'” Eccleton said.

3. Create an emergency fund

Having an emergency fund – reserve money that can be accessed quickly – provides peace of mind. 

This avoids having to use a credit card to the maximum or to apply for a loan to cover an unexpected bill. 

Sam Farquhar suggests opening a separate account and putting an affordable amount of money each week.

“Maybe it’s a [very] a small amount, but it builds up over time… it could just be emergency money, so instead of reaching for your credit card, you reach for it,” Farquhar said.

4. Manage high-interest debt

People who have multiple high-interest loans might consider combining them into one debt at a lower interest rate to make repayments more affordable.

Some credit card providers offer interest-free periods on transferred balances. Organizations such as Ngā Tāngata and Good Shepherd, offering low-interest or interest-free loans to eligible applicants.

“Do your research and consider combining all of your repayments into one debt at a reduced amount,” Farquhar suggested.

“If you’re struggling to pay your existing debts, negotiate payment plans with your creditors to avoid being hit with more interest and fees.”

5. Consume wisely

Here are some ways people can save money on daily expenses:

• Shop around for groceries (eg compare prices between Pak’nSave and Countdown, use local vegetable stores).
• Opt for supermarket house brands and cut out excess snacks and packaged foods. 
• Shop once a week or less (avoid buying supplements when traveling fast).
• Replace take-out coffee with canned coffee sachets.
• Plan a menu for the week and cook at home (including lunches).
• Go “meatless” and research healthy alternatives online. 
• Get involved in a community vegetable garden.
• Use the Gaspy app to find cheaper gas prices.
• Compare electricity prices online at Powerswitch.
• Compare broadband costs between internet service providers.
• Use free Wi-Fi (for example in libraries and shopping centres).
• Ask your mobile operator if your package is suitable for your use.
• Avoid upgrading your mobile at the end of each contract.
• Plan ahead for Christmas (for example, ‘Christmas Club’ cards are available at places like The Warehouse and in supermarkets).

People who want help managing their expenses can contact Money Talks, a free financial helpline, a community budgeting service, or a Citizens Advice Bureau. Free budgeting tools can be found on websites such as Sorted.

Cited:  Fascinating Business