KEY POINTS:
Surviving the slowdown in the New Zealand economy is all about planning, preparation and getting rid of debt as soon as possible, according to the financial experts.
Acumen financial adviser Lisa Dudson says it's a good time to revisit the budget, get rid of debt and ensure you have an emergency pool of money - just in case.
"It's about going back to the basics and reassessing your overall financial position."
If you need help to do this, Dudson says, it's important to go to the right person for the advice you need and do your homework on checking out their qualifications and experience.
"If you just need basic advice on how to put together a budget, a budget adviser is the best person to help - this service is often available for free."
"If you just want to check whether you are on track and have the right insurance or mortgage set up a financial adviser can be a good place to start and if you are at the point where you have some money to invest - an investment adviser or qualified financial planner is the right place to go."
She says it's important that people recognise that they must pay for this advice and good quality advice comes at a cost. An hour-long financial health check can cost between $250 to $500 per hour or session.
Dudson says many Kiwis have a DIY psyche when it comes to investing - a problem which became evident last year in the finance company collapses. While advisers had some exposure to the finance companies many individuals had all of their money spread among the finance companies and considered this to be diversification.
"A financial check-up can cost around the same as maintaining your car - what is more important - your financial health or your car?"
Even those who want to go it alone can benefit from professional advice to check whether they are on track, she says.
Budget adviser Gail Hembest from Care Waitakere Trust, which is part of the free New Zealand Federation of Family Budgeting service, says people need to plan, prepare and get help as soon as they can if they run into trouble.
"The sooner you get help before you get into a crisis the better. People hesitate because they consider their finances to be a very private thing - people often feel a bit ashamed. But our service is confidential and free."
In setting up a budget, she says, people need to consider their priorities and think about their needs over their wants."If you have debts, pay off those with the highest interest."
Debt consolidation, where all your borrowings are bought together into one loan can be an option, but Hembest says people need to approach it carefully as the loan may have hidden administration costs and borrowers may not be reimbursed if they pay it off sooner than the term. If you can't afford to pay off the credit card all at once, consider switching your debt to a lower-interest credit card.
Hembest says people should also be wary of 'no money down, don't pay anything for two years deals'. "If you can't afford it now - can you afford it then?"
Before Christmas she saw a lot of people unable to pay their mortgages after coming off a lower fixed-term rate and hitting the higher mortgage rates.
Hembest says people should be aware of when they are coming off a fixed rate and prepare for it.
Shopping around can be a way to get better deals.
Budgets aren't just for those who are financially stretched - everyone should have one. "If you don't have a budget then you don't even know where you are going," she says.
ON THE WEB
www.familybudget.org.nz
www.sorted.co.nz
