Diana Clement: The magic number you need to save to live comfortably

You should be putting away at least 10 per cent of what you earn. Photo / Getty Images

As we say goodbye to 2022 and welcome in 2023, it’s a good time to catch up on the very best of the Herald columnists we enjoyed reading over the last 12 months. From politics to sport, from business to entertainment and lifestyle, these are the voices and views our audience loved the most. Today it’s the top five from Diana Clement.

The magic number you need to save to live comfortably - July 10

What’s the magic number you need to save to be comfortably off through life? I’d argue it’s 10 per cent of all you earn from your very first paper round or job in hospitality.

That 10 per cent is the absolute minimum. Some would say 20 per cent.

Rules of thumb like this help people who can’t or don’t want to budget down to the last cent to ensure they have sufficient money for their needs. Most people cross their fingers that whatever they’re putting away is going to cover needs as they arise, which can be anything from buying a house to an operation they can’t get through the public health system.

The magic 10 per cent will ensure you can live within your means, all going well, and survive the curveballs life throws at you - although some insurance would help with that.

There is a misconception that the KiwiSaver default rate is 3 per cent because that’s what we need to save to be comfortably off in retirement. The figures were set because that was what it was believed New Zealanders could afford to spare from their pay. It’s just not enough in reality.

Read the full column here

The coolest idea to beat inflation - June 12

As inflation bites, most New Zealanders are trying to save money at the supermarket. Your freezer is a perfect weapon for that. And it doesn’t even need to be a large one.

I save hundreds of dollars each year by using the freezing section of my fridge-freezer as a tool in my quest to waste zero food. The money savings are really hitting home since inflation began to bite.

The trick is to buy in bulk when food is cheap, freeze leftover ingredients and meals before they go off, and ensure that I have a good stock of home-made and home-grown foods that would otherwise cost a fortune at the supermarket. I freeze my annual supply of pesto, made when my home-grown basil or mint is plentiful.

I attended a Love Food Hate Waste event last year, where among other clever tricks, the presenter pointed out that “sell-by dates” should be viewed as “freeze-by dates”. Once in the freezer foods that could otherwise have gone off can be kept for months.

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Why you should bank with a Kiwi company - June 26

If you buy New Zealand-made goods, why not bank with local companies as well? New Zealand’s Aussie-owned banks send up to $6 billion of profits offshore each year.

I have to admit it’s not obvious from their names which banks are New Zealand-owned. Banks with names such as Bank of New Zealand, ANZ (Australian and New Zealand Banking Group) and ASB (formerly Auckland Savings Bank) are all Aussie-owned. So too is Westpac.

For the record, the locally owned banks are: Kiwibank, SBS Bank, Heartland, Co-operative Bank and TSB Bank. There are also building societies such as the Heretaunga Building Society and credit unions such as Unity, providing mortgages, loans and banking-like services such as debit cards.

The five New Zealand banks make up just over 8 per cent of the market in New Zealand. They’re all a little different, says Mark McLean, chief executive of SBS Bank.

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How to reduce your grocery bill - August 28

The cost of groceries has gone through the roof. Canstar’s Pulse report earlier in the year found a doubling of people saying their biggest financial worry is groceries.

The vast majority of shoppers could spend less at the supermarket without impacting their nutrition or enjoyment of the food.

One great way to start if you want to reduce your overall spend is to plan your meals and have a paper or electronic shopping list. I use Google and just have to say: “OK Google, add milk to my shopping list” and it’s done. The AnyList app has a 4.9 rating on Apple and 4.7 on Android, and has lists as well as meal planning that can feed into your lists. The MyCountdown app also has a shopping list, which is organised by aisle.

Shopping around can be another way to save money, but do be careful of racking up a petrol bill, says David Verry, financial mentor at North Harbour Budgeting Services.

Every day, thousands of New Zealanders are using the Grocer.nz app to compare the supermarkets’ prices.

Verry has a lot of good tips for cutting your supermarket bill. Start by making sure you eat before you go. Try to shop on your own, and get in and out quickly, which will help you stick to your list.

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Are you living within your means? - April 3

It’s time for New Zealanders to start living within their means. If inflation wasn’t enough of a shock, Russia’s invasion of Ukraine has brought more pain to the pocket by the day.

Just how badly we live outside our means currently has been highlighted by Canstar, a money comparison and ratings site, in its annual Consumer Pulse Report.

The most shocking figure from that report for me was the 69 per cent of people who couldn’t survive two months without any income. I realise there isn’t much fat in many people’s outgoings, but people of all income levels who budget generally do manage to reallocate some spending to savings and can build up an emergency fund.

The research highlighted that 58 per cent of us spend more than we earn and one in five people live payday-to-payday. Canstar’s general manager Jose George noted that the figure is up from 56 per cent at the beginning of this year. Inflation is biting.

The problem gets worse the younger the respondents are. Around 65 per cent of under-40s admit their spending outpaces their income.

George was surprised that, despite these figures, only 32 per cent of us worry about our finances.

Read the full column here