Start with your personal goals.
What do you want to achieve this year and five years down the road? What can you do to ensure you keep well across all aspects of your life? Where do your finances come in?
As a next step, start having some conversations.
Money is often a taboo topic, but it doesn't have to be. The more we talk about it the easier it becomes, plus talking to your friends and family might give you some ideas you can use yourself.
Get their tips on how to reduce your weekly grocery spend, ask them about how they went about getting a pay rise or get a recommendation for a financial adviser they've used.
Once you've got your goals sorted and have started talking about money, it's time to put a budget in place. Use an app or online tracking tool to monitor your spending over the course of a pay cycle. You might be surprised at where your money is actually going.
From there, you can decide what spending you need to cut, set some savings goals and how much money is going to go where each time you get paid.
Factor a rainy-day fund into your budget, too. Many of us were taken by surprise in 2020, with many New Zealanders taking pay cuts or even losing their jobs. Having three to six months of expenses (or even just one or two) saved up can make a huge difference and give you breathing space should you find yourself in a tough financial situation down the track.
Next on your checklist should be making some time to review your finances. Just like with a personal fitness plan or an annual employment review, it pays to review things every so often to make sure you're on the right track.
Look at your KiwiSaver: the fund you're in, the fees you're paying and consider whether your appetite for risk (your willingness to ride out the ups and downs of the market) has changed. It can be a good idea to seek professional advice if you're unsure of the best fund for you.
It's also helpful to do a similar review of your insurance policies. Part of being financially well is feeling peace of mind that you're covered when things go wrong, so make sure your policies are covering you for what you need – and on the flip side, that you're not paying for cover you don't actually need.
2020 also saw a rise in side hustles and independent earning, and if you're looking for some extra cash this year this could be something for you to consider.
Are you doing something meaningful? Work is not all about money; for many it's also about ensuring there's purpose and passion in what you do. Consider whether you could monetise something you're passionate about and turn it into a little extra cash on the side for a rainy day.
Finally, there are plenty of free tools and resources you can use to help you get started on your journey towards financial wellness, from blogs and podcasts to books and practical tools.
If you're the kind of person who needs that accountability and motivation from someone else (much like a personal trainer when working on your fitness), you can also consider seeking guidance and advice from a professional.
How you go about your financial wellbeing journey is up to you – what's important is to take that first step and now is the time to start.
- Richard Klipin is chief executive of the Financial Services Council.
