INTHE NATION’S PRAYERS Money tips don’t change
(national) (Auckland) (2yr fixed) (June quarter) (June quarter) (June quarter) crashing in the GFC.
GDP per capita as at the June quarter of 2004 was $43,159.
As of June this year, GDP per capita was $51,407, including adjustment for inflation, an increase of about 19 per cent.
At least we’ve been heading in the right direction, but that’s not really so flash when you consider the rate of top-line GDP growth across the past 15 years.
Growth has been flattered by an immigration boom, which has seen New Zealand’s population rise from 4.06 million in June 2004 to 4.94 million. That’s a staggering 21 per cent increase.
But what’s even more staggering is the extent to which this was a surprise — although it goes some way to explaining why we’ve ended up with a housing shortage and an infrastructure deficit.
A national population projection published by Stats NZ in December 2004 estimated that New Zealand’s population would hit 5.05 million by 2051. In fact, we’re on track to hit that number by 2021 — 30 years ahead of schedule!
It’s not surprising we’ve struggled to cope with the rapid rate of population growth.
So New Zealand is a more dynamic place and it is a wealthier place.
But the greater wealth has been underpinned by commodity exports, tourism, house price growth and population growth.
We haven’t markedly improved our productivity, our fundamental ability to create wealth.
And we’ve become a less equitable place.
The challenge for the next years is to address these issues while we continue to grow.
HWhat’s your view? letters@hos.co.nz
Were we a richer nation? That’s highly subjective when you deal in averages and medians. Nominally, we were wealthier. The kiwi dollar was worth US68c compared to US63c now.
But if you view the strength of the kiwi as a measure of the country’s relative economic success then, again, it comes down to the direction of travel.
The kiwi would hit US80c before
We haven’t markedly improved our productivity, our fundamental ability to create wealth.
I have been writing about personal finance in columns for the Herald family of newspapers for 15 years. A lot has changed in that time, although the basics of budgeting, spending within your means and investing still stands.
1. You don’t need all that stuff. Things that didn’t exist 15 years ago — such as iPhones and Nespresso machines — are seen as essentials. It cuts into savings and forces us to buy larger houses to accommodate everything.
2. Run from hard sell.
The worst hard-sell I experienced in New Zealand as an undercover journalist was from Blue Chip Financial Services and Youi Insurance.
The red flags were blindingly obvious, but Kiwis want to believe what they’re being told.
3. Save little and often.
Even low-income KiwiSavers have built up thousands of dollars of savings for the first time in their lives by contributing a little each month. Sharesies allows you to invest a few dollars each month.
4. Markets go down as well as up. Never trust a salesperson using graphs that only go upwards. I’ve seen too many over the years.
5. Look for solutions not excuses. The term “excusitis” was introduced to me by author Lisa Dudson a decade back. It’s really common for people to look for excuses why they can’t do something. I always try to look for solutions.
6. Don’t envy your neighbours.
I first heard Warren Buffett’s saying “Only when the tide goes out do you discover who’s been swimming naked” in the early 2000s. It is so true. Some of the people I know who live the most opulent lives have no savings. 7. New Zealand is the Wild West.
I first used the Wild West analogy about financial services in 2005. By 2014 it was a bit better, but when I wrote another take on the Wild West analogy a staff member from one of the regulators shouted in my face. Literally. A one-word answer in 2019, for lack of space, is “ANZ”.
8. Reflect.
I learn more from personal experience as well as feedback from readers. Even the “you stupid moronic journalist” emails add to the mix.
9. Own your mistakes.
We all make mistakes. They can be a great learning tool if we accept them. One of my children just frittered away $700 of money earmarked for savings. The learnings from that mistake will be worth big bucks over the years.
10. Budget.
The big bad budget works. Call it a spending plan if you like. Apps make it easier. A great idea I’ve picked up in the past couple of years is, if you can’t budget at least pick three areas of your expenditure to set limits on.
11. Be honest with yourself.
I upset my then-editor in 2016 by suggesting Kiwis are dishonest by lumping alcohol and other luxuries as “groceries” in their budgets. More honest would be adding this spend to your entertainment budget. That’s one of the many examples where we aren’t honest with ourselves.
12. Teach your children well. Children who don’t learn young about money will be a financial drain and worry their parents for years to come. Set rules and give them their own money to spend. Once it’s gone, it’s gone.
13. Don’t take investing advice from your mates.
We all know someone who shows off about their investing prowess. Three months’ or six months’ returns do not make an investor to learn from. What’s more, they might be trying to justify their own actions.
14. Diversify.
Over the past 15 years too many Kiwis have lost their life savings through finance company investments, dodgy property investment companies, and scams. No one should have all their money in one basket.
15. Plan for the unexpected.
Have income/medical/mortgage/ home insurance to cover you rather than going cap in hand to Givealittle.