Diana Clement: How to be shrewd with your money

Split your salary between accounts, with weekly spending money sent to one account and savings sent to another. Photo / 123RF

COMMENT: Think of it as doing a Marie Kondo on your money. Does that spending bring you joy? Can you thank your old ways and say goodbye to them?

Here are eight ways to be more shrewd and resourceful with your money.

1. Only spend your own money

Yes, you can spend the money available through overdrafts and credit cards - but it's not yours and never was. In fact it's a ruse by banks and other lenders to suck hard-earned income out of you in interest and fees.

2. Pay yourself first

Decide how much you want to save every month and set up an automatic payment so that the money is set aside before you can spend it. You then budget/learn to live on whatever is left. Some employers allow wages to be paid into two bank accounts, with weekly spending money sent to one account, and savings sent to another, points out Banking Ombudsman Nicola Sladden.

"Look at savings as paying your future self, not something to be done if you have enough money left at the end of the week. Put aside some pocket money or a fun fund so you can also have everything in moderation now."

3. Shop around for everything

Shop around for both your financial products and the goods and services you consume every day, says Jose George, general manager of the comparison website Canstar.co.nz.

"Shopping around is made so much easier these days with online resources."

Comparisons enable you to select the best options available for your requirements and empowers you to negotiate with your current or preferred provider for the best deal, says George. There are many comparison websites, including PriceMe.co.nz and Sorted.org.nz.

4. Make a game of tracking your finances

Compare what you spent today with the same day last week. Or line up for a competition with your friend. The one who spends less or reduces by a greater percentage that week/month wins a small treat, which preferably costs nothing. Very often we are blissfully ignorant of how much we spend on regular impulse and feel-good purchases that we want, not need, says George. "Much of this spend can be reduced and/or changed to generate genuine savings."

5. Invest time

Every single dollar spent here and there adds up. Sometimes those are simply unnecessary fees because you haven't invested time in tidying up loose ends. Sladden says make sure your daily bank accounts have fee structures that match your habits so you're not paying dishonour or other fees unnecessarily. "For example, are you paying an annual fee for a debit card when you only ever use your EFTPOS card?".

Track your direct debits and ensure they're deleted with your bank after the contract expires to make sure you don't get mistakenly overcharged.

6. Read, ask, disclose

Kiwis do stupid things to keep their premiums down that actually leave them with no cover. Examples include claiming they're the main driver of a child's car or quietly failing to declare a health condition.

"Well over 3000 people contact us each year with a problem or complaint about their insurance or financial service provider," says Insurance Ombudsman Karen Stevens.

"Many common complaints could be avoided if people understood what they were signing up to."

7. Learn about passive income

It's money you earn regularly without working directly for it - the net interest, rent, dividends you earn from your investments. Or, the staff member doing the work that you profit from.

8. Get a side hustle

That could simply be selling down the belongings that Marie Kondo has convinced you that you no longer need. Do something money making in your spare time. Even $20 or $30 a week adds up to a lot over a year.