Reflect on how you spend and save individually, and as a couple. Photo / 123RF
Reflect on how you spend and save individually, and as a couple. Photo / 123RF
OPINION:
Whether you're north or south of the Bombay Hills and you're in full or partial lockdown you're lucky. You have more time to yourself this coming week. Why not use that to ensure you come out of lockdown financially fitter?
Start by reflecting
Probably the most powerful thing anyonecan do for their personal financial situation is reflect. Sit down with pen and paper and slice and dice your life in different ways. Look at what you did well last year. Or the past 10 years. And how you can do more of that. What didn't go so well financially? Reflect on how you spend and save individually, and as a couple. What purchases this year most benefited you and what did you buy convinced you would use, but didn't? What aspects of your finances do you avoid? What one thing could I have done differently in the past week, month, or year, that would have benefited my finances? The list of possible reflections is long. The more honest you are the better. But don't use this as an excuse to beat yourself or your partner up. What's done is done. What's powerful is how you can move on from this and hopefully reprogramme yourself.
It's a rare person whose budget doesn't leak. Some more than others. I must admit that my budget has sprung a couple of leaks in lockdown, even though overall I've spent less in several categories. The temptation of online spending combined with enforced lockdown has led me to buying a dedicated Chromecast to run YouTube exercise videos in my home gym and a new piece of kit for said gym. They're budget leaks because they weren't planned, and I could exercise without them. It's the same for all those WTH purchases we make. people's leaks are day in day out at cafes or bars. Or they could be my Chromecast multiplied many times over. Knowing what's a leak and what's a true need is useful. Some
Double down on debt repayment
Take those leaks from above and apply that money to paying down debt. Even $5 or $10 a week really adds up. Whether it's consumer debt or mortgage debt you're the winner from doing this. If, for example, you commit $20 a month extra to a $5000 debt at 20.95 per cent interest, you'll save $694 in interest over five years and pay it off one year earlier. Likewise, if you're five years into 30-year $500,000 mortgage and start overpaying by $100 a month, you'll save $27,162 in interest and pay it off 20 months ahead of schedule. Always check with your lender that there are no penalties for overpaying.
Investing in cryptocurrencies comes with risk. Photo / 123RF
Start a regular investing plan
So, you've talked about investing in shares, funds, or even cryptocurrency - although the latter does come with a whole lot of risk. Providing you're not diverting money from regular debt repayment or KiwiSaver, then look for investments you can learn from. Even $5 a week adds up to a lot of learning. It's also habit-forming, which is another huge success tool in personal finance.
Write a plan
Take your reflections and learning and write a plan with short-, medium- and long-term goals. Sorted has a goal planner template here: https://sorted.org.nz/tools/goal-planner/results. I sometimes think a life plan template is more useful than simply hiving off finances. It can be very powerful. When I Googled "life plan template" this week I ended up a little down the rabbit hole. I found all manner of templates on Pinterest and elsewhere. People's brains work differently, but one I found had eight pages with yearly, monthly weekly and daily plans, a monthly budget, habit tracker, goal planner and to do list. For others a simple mind map would work. Some templates looked like virtual Filofaxes, for those old enough to remember them. I wrote more about creating your own plan this time last month. That article can be found here: https://tinyurl.com/NZHpersonalplan.
