Financial experts reveal the one thing they wish you knew
It’s something most of us think about every day. Whether it’s earning it, saving it, or spending it, money plays a big part in our lives.
This week is the Sorted’s Money Week, so we asked some of the country’s most prominent financial advisers and coaches what one thing they wish more New Zealanders understood.
Martin Hawes: My wish is that people take a couple of minutes to be sure that they are in the right fund with the right asset allocation (whether KiwiSaver or other investments).
Too many people are still in KiwiSaver default funds or other funds which will either not give good enough returns or which carry too much risk.
A couple of minutes on a risk recommender calculator will give you a good idea of whether you should have a fund that is conservative, balanced or aggressive.
Shula Newland: I wish people understood more the importance of savings instead of debt:
1. That the little things add up, and they often don’t realise how much they are frittering away when they could be saving.
2. That if you aren’t able to put money aside for yearly expenses (eg car and house repairs, Christmas, holidays), then you are going backwards and spending more than you earn. You are likely going to end up resorting to getting more debt if something crops up, and then getting up in a worse financial situation.
3. That the decisions they make (or don’t make), if they have an impact their finances, are likely to impact their families’ well-being as well. It is well-documented that financial stress has a run-on effect on the health and wellbeing of the parents, which then is going to have an effect on the children.
I see people coming to us three to six months after getting a loan for a new car, but they haven’t made the connection that the cause of the stress was the car loan, and not planning to make sure it was affordable or saving for it instead.
If people are unable to put money regularly into savings, they are probably living on the edge without realising it until something crops up and tips them over.
People don’t often realise this and they think that something beyond their control has happened, when in reality if they had reassessed their finances earlier they would have realised the position they were in and could have taken steps to avoid it by making some changes and saving.
Liz Koh: The one thing that most people struggle to understand is the power of being able to spend less than you earn. Having the ability to spend less than you earn gives you financial resilience, the ability to avoid debt and to create wealth.
It is not until people see the benefits of this principle by putting it into practice over a period of time that they realise how powerful it is.
However, putting it into practice is one of the most difficult things to do.
Lisa Dudson: The small things you do with your money on a regular basis usually make the biggest different over the long term, not how much you earn or how much of a financial whiz you are.
Hannah McQueen: Make money your servant, not your mas- ter. We complicate our lives when we fail to give money its proper importance.
Understanding how it works and what you need to do to make it work better for you are your responsibility. No-one will really care about your financial situation as much as you, so be brave and take control. If you are sinking, then stop. If you are floating, try to start flying. We all need to live within our means and have a robust strategy to get us ahead faster, while living a life you enjoy today.