Health check your finances
money management skills.
Murray Campbell from Baseline said: ‘‘Most people in intensive care were on limited incomes or had a very patchy employment histories for a whole bunch of reasons such as health, break-ups in marriage, or moving around the country.’’
Maxwell said people in intensive care needed help focusing on basic money management, paying down, and avoiding, ‘‘bad’’ debt. Her top tips were: One: Pay down highest interest debt first.
Two: Build up a buffer, an emergency or rainy day fund.
Three: Work out what you need versus what you want
Four: Don’t spend when you are hurting
Five: If you’re thinking of borrowing, save the amount you’ll be charged for repayments for four weeks first, because if you can’t save, then you won’t be able to pay your debt back.
On the ward
This was the 64 per cent of people whose finances were not lifethreatening, but were pretty sick, somewhere in the region of 1.8 million souls aged 20-69.
Often these were people with decent incomes, but who are just coasting along overspending, and undersaving.
Their key vulnerability was they lacked ‘‘financial selfawareness, self-knowledge and self-control’’.
Some have what Campbell called ‘‘sophisticated self-defence and self-denial mechanisms’’ allowing then to spend more money than they earned.
Campbell saw a lot of ‘‘psychic mathematics’’, particularly in Auckland, where people felt it was okay to spend more than they earned as long as their home’s value was racing up.
‘‘We’ve interviewed people who were on interest-only mortgages, and they felt it didn’t matter because the value of their house was going up so quickly,’’ he said.
People spent to feel more connected to community, he said.
‘‘They needed to feel relevant, and engaged with the broader community by travelling and experiencing,’’ Cambell said.
Cultural differences were identified by some interviewees as making it easier, or harder to get ahead.
‘‘Indian and Chinese couples commented that European New Zealanders are much less proficient with money, or comfortable talking about money, than they were,’’ Campbell said.
Many people in this group did not see eye-to-eye with their partner over money, he said.
It was common for people ‘‘on the ward’’ to have so little saved that they were one redundancy, one head-wind, away from immediate financial distress, Baseline found.
Maxwell’s top tips for people ‘‘on the ward’’ were:
One: Calculate how many pay days until your retirement.
Two: Ask yourself if you know which KiwiSaver fund you are in, and whether you can afford to put in more.
Three: Ask yourself how many hours work you need to do to pay for that TV, phone, car, etc.
Four: Know your partner’s habits with money as well as your own. Talk about money as a family.
Five: Don’t try to keep up with the Joneses.
GP visits
This was the happy 22 per cent of people who earned enough, and managed their money well enough, that they were prospering, perhaps as many as 640,000 people in the 20-69 age bracket.
‘‘For some people money management and finance is a natural language,’’ he said.
‘‘They can easily position themselves in the future.
‘‘They can hover above themselves, and say, I will thank myself in 20 years for saving today.’’
Financial acumen was not only the preserve of people with tertiary education, Campbell said.
‘‘I don’t think there’s a hugely strong link between higher education and preparing yourself for your financial future,’’ he said.
Many in this category shared a useful trait.
‘‘Their sense of wellbeing and sat was not determined by how much they were spending,’’ Campbell said.
Maxwell said their key challenge was ‘‘optimising’’ their investment planning so their money was working hard for them. Maxwell’s top tips were: One: Get some good professional financial advice to manage long term decisions.
Two: Knock into your mortgage as fast as you can.
Three: Diversify, diversify, diversify.