Dawn Picken: Buy now, pay forever

Spending or saving, some people can't do both. Photo / File

Our tribe just returned from Bayfair, where Master 14 bought a new pair of trainers. "Mum, can you return these? I decided I don't want them. They're too expensive."

When you're a teenager with no regular income and $160 burning a hole in your Eftpos account, you do these things. And ask Mum to unwind your mistake.

As adults, we try to do better. Often, we fail. We live in a gotta-get-it-now society where finance companies designed to divorce us from our money sprout like weeds. One of the latest additions to the spend-it-if-you-don't-have-it landscape is Afterpay. It's an Australian financial services firm which saw 97 per cent revenue growth this year, according to website The Motley Fool.

If you want to buy an item for $2000 and Afterpay approves the transaction, you can pay $500 upfront and Afterpay forks out the rest. That means you owe Afterpay $1500, payable in instalments with zero interest. There's a late fee if you're tardy with a payment.

Motley Fool says millennials love the arrangement, because they can buy expensive stuff without paying all at once - even if their credit is bad.

I hate this idea, which makes me a curmudgeonly dinosaur. Picture me in a reclining chair, reading an old-fashioned book, reminiscing about re-spooling cassette tapes using a lead pencil.

Growing up, I remember laybuy (we called it "layaway" in the US). We'd go to the department store, pick out knock-off designer jeans, fuzzy jumpers and plaid shirts for school, then bring it to a counter where someone would take our information and promise to give us the goods - after we had made all the payments.

Now we have credit cards and other methods to get it now, pay later. No deposit, no interest for 12 months - free until you forget you financed the sofa, table, bed… and get hit with fees.

Used by itself, something like Afterpay won't send your household into liquidation. But many borrowers juggle multiple purchases and schemes. Throw high-interest credit cards into the mix and you're eating pantry noodles because this week's grocery shop must wait.

Here's the thing: We don't live in a financial vacuum. We're not just buying shoes, we're paying for rent or a mortgage, utility bills, food, petrol, kids' activities… So what happens when you're spending $200 each fortnight on a new TV and the car battery and washing machine die in the same two-week span? That happened to me recently - the battery cost more than $200 to replace and the washing machine repair was in excess of $400. Thank goodness I didn't have payments on anything like Afterpay. Life's hiccups are what emergency funds are for. But Kiwis either can't afford to or won't save any money, as the average New Zealander, according to data, spends about $400 more each year than he or she earns.

New Zealand household debt, including mortgage and consumer debt, comprises more than 166 per cent of disposable income. Some people borrow money to pay rent, while others' money problems stem from lack of restraint. How many people do you know who plead poverty while spending more than $100 each month for Sky TV or shelling out $50 every weekend for beer and spirits? "I don't have any money left over to save," they whinge.

Some borrowers treat their homes like piggy banks, increasing their mortgage debt to buy a new car. Research showed 80 per cent of people who do this once will do it again. And when interest rates rise or we lose our jobs, we put our most valuable asset - our homes - at risk.

Also, we're not financially literate, especially when many of us consider a lottery ticket an investment in our future. I wish more colleges taught basic financial literacy - about saving and investing, living below your means, and not renovating your kitchen because your neighbours' gleaming white benches look really good (I nearly did this several years ago. Thank goodness I didn't, because I'd still be paying it off).

Rocketing housing costs make the Bay of Plenty an expensive place to live. But we don't have to make a stressful situation worse with get-it-now-pay-later. Recognising savings as deferred spending can be tough. You can see the pricey shoes and wear them now, but the family holiday 12 months away is intangible, murky. It takes discipline to skip the shoes and focus on Fiji.

If you're reading this on October 26, we have 60 days until Christmas. Enough time to consider a holiday shopping plan, if you haven't already. One that doesn't include debt. The temptation to splurge is tremendous, especially when you have kids. My teens enjoy one or two gifts for longer than a month. The rest get broken or forgotten, leaving me with buyer's remorse. Christmas is a chance to teach children about swimming against the tide of consumerism. I know families who give each child three presents. The kids seem happy enough.

And children are pleased when they can save up for something they want.
Miss 15 just got a new phone. She upgraded her iPhone 5 to an 11. While she was spending $1350 for a new device, I replaced my ailing generic smartphone with a new generic smartphone. For about $300. Our technology priorities are different.

Though I got my daughter over the line by kicking in the final $200 for her heart's desire, she earned the rest – by mowing lawns, cleaning house and organising our cupboards and wardrobes. The kid rivals Marie Kondo of Tidying Up fame for folding, stacking and sorting. I'll keep her on.

Her brother's different. He rarely has more than $40 in his bank account. He wants what he wants when he wants it.

I'm bracing against the crush of consumerism when it comes to teaching my kids about delaying gratification. Save more, spend less isn't fashionable or fun. But it beats getting hand-outs from Mum the rest of your life.

Dawn Picken also writes for the Bay of Plenty Times Weekend and tutors at Toi Ohomai. She is a former TV journalist and marketing director who lives in Pāpāmoa with her husband, two school-aged children and a dog named Ally.