So many questions! Over 1,000 came in for this year’s Sorted Money Week. Turns out most of us are wondering about many of the same things when it comes to money: KiwiSaver, investing, loans, property, retirement, spending plans.

He waka eke noa – we’re all in this together as we sort our money. All these questions keep us learning and in a growth mindset. After all, one thing we find out today could set us up for the future.

Here are the top 10 questions Kiwis asked us during Money Week:

1. “How can I budget when I’m a shopaholic?”

You’re probably being a bit hard on yourself, as we all lose control and impulse buy sometimes!

Have you ever considered planning for it? That is, make a spending plan (a.k.a. a budget) that has a category for all your spontaneous money moves. When you give your budget room to breathe and bring all your spending into your plan, it makes it easier to stay on track.

That said, if you’ve got a real addiction and truly are “shopping until you drop” – dropping way too many dollars uncontrollably – make sure to get some help and support straight away.

2. “I already cut corners with my spending (skipping coffees, packing lunches) but I never seem to get anywhere. What should I be doing?”

Yeah, that’s obviously not going to be enough on its own. Saving money is not just about plugging the leaks here and there – it’s also about guiding your money where you want it.

That’s why we’re really into spending plans these days, as well as what’s called “paying yourself first”. The idea is, before you pay everyone else, automatically tuck money away separately – sneakily even – towards saving for what you really want. So it goes to your goals – not someone else’s. That’s the way to get ahead.

3. “I’ve got money in the bank getting next to nothing in interest. But I have no idea about investing – help!”

We feel your pain – everyone goes on about compound interest and all that, but if there’s not much around to compound (and it’s still getting taxed), you get nowhere. And if you were trying to live off your savings like retirees do, it becomes even more challenging.

This is why investing is part of everyone’s future, and why many of us are having a go with shares these days. Now we’re not encouraging everyone to take too many risks (no sense losing sleep over this), but investing in shares can help your money keep growing so you get something back into your pocket.

4. “I’m looking at my KiwiSaver and all the debt I’m carrying ­– why can’t I withdraw my KiwiSaver and just pay off all my debt?”

Well, imagine for a second that KiwiSaver didn’t have any rules around the money in it. How much do you think would stay in our accounts?

We’d bet not much. KiwiSaver would become a “get out of debt” card. People would run up their debt, hit their KiwiSaver, rinse and repeat. Soon that first home you were saving for, or the retirement you’re looking forward to, would disappear out of sight.

You may be allowed to withdraw funds from your KiwiSaver if things get dire and you can’t put food on the table, and that’s a good safety valve. But hardship withdrawals aren’t for paying loans, fines or debt collectors. KiwiSaver is for those long-term goals worth sticking with.

5. “I’m trying to jump on the property ladder as soon as. What are banks looking for?”

They’re looking to you for a regular stream of money for decades to come! That’s what allows them to turn a profit.

To make sure you can keep that steady stream flowing as you repay your mortgage, they look at two things in particular. The first is how much of a deposit you have. That’s why KiwiSaver can be such a help with buying your first home – you’re allowed to withdraw funds to boost your deposit.

The second is how much income you have available to handle those repayments. The more you have of both, the more likely they will throw money at you and get you into a property.

6. “When COVID-19 hit, I shifted all my money to a conservative KiwiSaver fund. How are things looking now?”

Many of us moved our money to safer ground when we saw our balances falling. That’s a natural reaction, but unfortunately this locked in our losses and we’ve missed out on much of the recovery that’s happened since.

Ideally you want to be in the right type of fund for you and your situation, so you don’t have to try and react to the ups and downs in the market. You can set and forget. Finding the right fund is based primarily on how soon you plan to use your money. For managed funds, try this; for KiwiSaver, this should give you an idea.

7. “How soon should I start saving for retirement, and do I really need a million dollars to retire on?”

It’s never too early! But pay no attention to headline numbers aimed to shock you into saving. You probably need far less than they let on.

Think of it this way: for every $100,000 you save, that typically equates to around $100 a week throughout your retirement. And that’s on top of NZ Super. So your answer depends on what your lifestyle goal is.

It also helps to have a look at what retirees are spending today in terms of a “no frills” or “choices” lifestyle, based on surveys. You may find your retirement number is lower than you think.

8. “Should I be putting more or less money into KiwiSaver now?”

Since KiwiSaver is not a savings account, but rather an investment account that goes up and down in value, this is a good question to ask. Is it worth putting more in?

Beyond making sure you put in enough to get your employer and government contributions, which make KiwiSaver a no-brainer, how much you contribute is up to you.

To help you decide, you can easily estimate how much you’re on track to achieve in KiwiSaver. If you are a bit underwhelmed by your projected results, you have two levers to change it – your contributions and the type of fund you’re in. Those are the two KiwiSaver settings you can change to boost your future results.

9. “How bad is it if I don’t pay off my credit cards every month?”

It’s bad. It’s an emergency! It’s a fire out of control.

Okay, maybe that’s over-egging it. You’re not a bad person, after all. If you don’t pay off your credit card each month, don’t beat yourself up.

But don’t let yourself off the hook, either. You might not even realise how much your credit card interest and fees are dragging you down and keeping you from flying forward.

So, do yourself a huge favour: find a low-interest card and make it your goal to get debt-free in the months and years to come. Wouldn’t that feel amazing?

10. “I’m in debt and don’t know where to start. Do I focus on just one or all of them at once?”

Since debt is like fire and can rage out of control, take any extra money you can find and use it like a fire extinguisher. Aim that money at one debt at a time, until you stamp that fire out. Then it’s on to the next until you’re in the clear.

Which debt should you pick first? The quickest way out is to target the one with the highest interest rate, but many just start with the smallest debt to get their momentum going. Find what works for you here.

And remember you’re not alone in this: help is at the ready. Reach out to the team at MoneyTalks, even anonymously, on 0800 345 123, help@moneytalks.co.nz or text 4029.

And let’s all keep “just wondering”. We’ve seen we’re often asking similar questions, and we’re all searching for answers.

Comments (7)

Gravatar for Kupajack10

Kupajack10

5:38pm | 10 Sep 2020

Kia Ora for that

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2:41pm | 10 Sep 2020

I just want to add an encouraging voice to those finding themselves in debt. It CAN be done. In the 90's our business went under and the bank suggested bankruptcy. We would loose everything, including our home. That was untenable, firstly loosing our home was not an option. Secondly, not repaying our debt meant we could not hold our heads high in our small town. So over the next five years, we repaid everything. The secret is communication. Get in touch with your creditors. Talking to our creditors allowed us to make small, regular, payments to each one. Yes, it took time, but everyone was getting something. We made bigger payments to those who had the highest interest but some companies stopped the interest. We cashed in shares, used everything we could to repay the debt. It was extremely stressful, but we learned resilience and stuck together. Some 30 odd years later, we are so pleased to be able to look back with pride at repaying our debt. The bank will happily loan to us if needed and our credit rating is in good standing. Just want to add, the IRD were fantastic, if you have problems repaying tax, talk to them. They were amazing with us and full of knowledge.

Gravatar for Sally

Sally

3:24am | 10 Sep 2020

This is really awesome advice thanks

Gravatar for Snowy

Snowy

7:46pm | 9 Sep 2020

Cool article, keep it up!

Gravatar for Pat Kane

Pat Kane

12:25am | 9 Sep 2020

Hi sorted, we are a couple of retired oldies and would like to join kiwisaver, but can not find any web site that spells things out in plain English, we have money doing nothing in the bank and would like to invest, just wondering if you could point us in the right direction to get us sorted, cheers Pat.

Gravatar for Malcolm Campbell

Malcolm Campbell

7:22am | 31 Aug 2020

I enjoyed the article. Thanks.

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10:53pm | 29 Aug 2020

If someone has to use the No Asset Procedure or liquidation because of ill health is their Kiwisaver able to be used to pay their debts?