Diana Clement: The 10 commandments of personal finance

Take advice from professionals but be wary of those who earn commission from their recommendations. Photo / 123RF

Setting rules can make managing your money a whole lot easier. Try these personal finance commandments to keep on track:

We need very little in life but fool ourselves into thinking our wants are needs.

2. Track your spending

Budgeting and tracking your spending make it much easier to live within your means. A budget is an educational tool, helps you identify leaks, set goals and start a financial diet if you need one. At least track your spending if you can't bring yourself to budget. Use an online tool from your bank or a budgeting app such as PocketSmith to slice and dice your monthly spending.

PocketSmith is a great way to track your spending. Photo / Supplied

3. Save 10 per cent of your income

If you start doing this from your very first part-time job your financial life will run more smoothly. If you're in KiwiSaver and your employer is contributing, that's 6 of the 10 per cent already. Make sure that some of your other savings go to build up an emergency fund so you don't need to borrow unnecessarily when the unexpected hits the fan.

4. Admit your mistakes

Do a bit of naval gazing when things go wrong but be willing to move on. All too often people go through a financial crisis such as the 1980 stock market crash, GFC, and now a pandemic, or personal events, and say "never again". Learn lessons to do better next time. It's what happens today and tomorrow that matters, not what you did wrong yesterday.

5. Don't make excuses

Excusitis is one of the worst afflictions known to personal finances. So often I receive messages from people who say, "yes, that's true, but my situation is different". It's usually only different because they've talked themselves into the idea and the narrative has sunk in.

6. Watch who you listen to

Try to step out of your echo chamber. I see so much misinformation about money on social media and advice from friends and family can lead you down the wrong path. Do take advice from professionals, although be slightly wary of those who earn commission from their recommendations. Do make sure you have adequate insurances.

7. Every cent counts

Small purchases add up to big spending. "It's only $2" or "just this once won't hurt". It does. If you only want a burger, don't get the meal deal. Use your spending diary to see how the fritter factor affects your long-term wealth. But don't forget to budget for a few splurges, or you'll stray from the straight and narrow. While you're at it, avoid borrowing for day-to-day living. Otherwise, you're paying more than everyone else for the same things.

Op-shopping is a good way to dress for less. Photo / 123RF

8. There is always a cheaper way

Think laterally about every purchase. One of my favourite mantras is "do I really need it?", because all too often I don't but am trying to convince myself otherwise. I'm an op-shopper and find if I bide my time I get virtually everything I need at a fraction of the new price. The cheapest way of all is simply not buying it. "Make it last longer" is another of my mantras. Every extra year you keep that sofa, car, suit, computer, mobile phone and other expensive purchases going before you upgrade means less spent in the long run.

9. Be kind and give to others

There are times to save and times to share. Everyone can help others they know personally and charities of choice. That can be by giving money or time. I also try to remember that small business owners have it tough currently and we can help them by shopping local.

10. Consider the planet

This is my newest commandment of only a few years. It usually manifests as buying fewer things. It also sometimes leads me to buy better quality stuff that lasts longer. Be careful, however, as this can lead to convincing yourself you need things when they're really wants.