A financial mentor can help if you are struggling to get on top of your situation. Photo / 123RF
A financial mentor can help if you are struggling to get on top of your situation. Photo / 123RF
Opinion by Diana Clement
Diana Clement is a freelance journalist who has written a column for the Herald since 2004. Before that, she was personal finance editor for the Sunday Business (now The Business) newspaper in London.
The pandemic and now inflation have hit hard for some Kiwis. Unfortunately, financial distress often leads to mental anguish, which makes it hard to think straight. When money is tight, feelings of worry and isolation bubble up and it can be very difficult to motivate yourself to take positivesteps.
If nothing else, anyone who can't see a way out of a financial crisis should pick up the phone and talk to a free financial mentor, says Nicola Eccleton, manager social inclusion at Good Shepherd New Zealand, a social lender which provides zero-interest loans to people in need.
They're funded by the government and charities and don't charge for their services. The number to call is 0800 345 123, or go online at MoneyTalks.co.nz.
"Some people are stressed and in such hardship, they can't see the wood for the trees," says Eccleton. "I'm always really conscious of giving tips, that some people just don't have enough money, and they just need support and help."
The advice the mentors offer will include how to access food parcels if needed, and very importantly for some, how to negotiate with lenders. The much-maligned Credit Contracts and Consumer Finance Act (CCCFA) requires banks and other lenders to consider payment plans for clients in crisis.
"Talk to your creditors. There are actually creditors out there who will behave really responsibly. But they will chase you if they think you're hiding from them."
One of the big issues that comes with a change of economic fortunes is shame/whakamā, which isn't fair, says Eccleton. With two and a half years of pandemic under our belts, there should be no shame. Stuff happens in life. "It's a barrier to people making the appropriate financial decisions," she says.
Working out a budget with the financial mentor for your new circumstances can help a lot. Then look at smart ways to cut spending.
It's difficult to change habits in the middle of a crisis. And some things, such as the cost of getting to work, can't always be reduced. Making a list of things that could help is a benefit, if possible.
If there are children in the family, involve them in a healthy constructive way, says Eccleton. No one wants to say "no" to the children. "It's not about saying, 'hey, we're hard up', or, 'hey, we're in poverty'. It's about saying things like, 'we've got some choices to make'.
"You might say 'we want to stay on top of our debt as a family, because long term, we'll be better off'. Or 'we want to save for a family holiday. So we're going to make choices'.
"You might say: 'so this week, we're going to make a choice between going to the movies, or getting takeaways'. What's more important to you guys this week'," says Eccleton.
You may have to choose between takeaways or the cinema. Photo / 123RF
Some people grew up believing buying second-hand is shameful. Reframe it as an environmental decision, she says. An example might be: 'oh my, there's such good bikes on Trade Me, and actually, they don't need to go to landfill'. "Reuse, recycle, that is so good for our pockets," says Eccleton.
When you have mental bandwidth, track your spending for three months. Knowledge is power. Use apps such as Powerswitch to reduce costs. Cancel subscriptions and use free services such as TVNZ, says Eccleton.
Another tip is don't add alcohol to the groceries bill. "Groceries are expensive. That's true. But imagine if you only drink once a week, what your supermarket bill would look like?"
On the subject of groceries, practice eating up leftovers.
Good Shepherd can provide no- or low-interest loans where appropriate. "So if you are thinking, 'Oh, crikey, I'm not sure how I'm going to repair the car', give our team a call, because then we can talk about a no-interest loan to repair the car, which gives you some breathing space."
Eccleton's final comment is to not use Buy Now Pay Later if you're in financial strife. "Buy now pay later is for people who are serious money managers."
