We all have something we should do for a better financial future. But when the weekend arrives, most of us reckon we have better things to do than look at bank accounts, set up a budget or figure out how to spend less and save more.
Yet taking the time to sort out our finances pays big rewards. Doing even one of the following tasks before Christmas will make you better off next year. Five or six and you're heading for financial superhuman status.
Keep a spending diary for a month
Take serious stock of where your money is going. Unless you have a very good budgeting tool or use a spreadsheet, chances are that good and bad spending are lumped together. Drill down. Split that $150 spent at the supermarket into essentials and non-essentials. I can assure readers the lovely bottle of Invivo Sauvignon Blanc I spent $15.99 on this week was not a necessity, even though it comes under the supermarket spending tab of my budget. Nor was a single item of the clothing I bought really "essential".
Once you have essential separated from non-essential, you can see how much spare cash you have. For most of us, there will be a lot more than we imagined. Use this new-found cash to pay off your dumb debt, says David Boyle, investor education general manager at the Commission for Financial Capability.
That's hire purchase, personal loan and credit-card debt. Then direct it to a rainy day fund so you don't have to dip into credit for unexpected expenses.
Organise your bank accounts
If you don't have separate bank accounts for bills, spending and saving, you should have. As your money comes in it should be automatically transferred to those accounts. That way you save without thinking and you can see how your spending is tracking for the month. If your bank doesn't have free sub-accounts, then switch to one that does.
Use reward points and gift cards
A lot of reward points and gift cards go unused before they expire. That's crazy. They're money just like the folding stuff in your wallet.
"Rewards credit cards have boomed in popularity in recent years," says Jose George, New Zealand general manager of Canstar. "The average interest rate on credit cards with rewards points is more than 19 per cent. So, many of us are paying for those rewards - make sure you use them before they expire. Think of gift cards as cash in hand," he adds.
"If you lose them or don't use them by the expiry date, it's generally money down the drain. If you can't think of anything to buy with them, at the very least use them to buy a new gift card with a new expiry date."
Shop around for lower interest rates on debt
Unless you have break penalties, you can switch your debt to another lender for a lower interest rate. Debt consolidation is popular as well. But it's not the magic bullet many people think it is. Some debtors simply use the opportunity of debt consolidation to borrow more money.
Take an honest look at your mortgage
Rates have been falling steadily. Why not increase what you're paying each month and get rid of your mortgage more quickly, says Boyle. Don't spend the extra money. Get ready now for when rates inevitably rise.
Get better rates on your cash savings
If you have money in cash deposits, savings or term deposits, check out interest.co.nz or depositrates.co.nz to compare rates. Ask yourself if your style of investment is suitable for your short- and long-term goals.
Holding too much of your savings in cash can be dangerous, says Mark Lister, head of private wealth research at Craigs Investment Partners.
"Deposit rates are the lowest they've been since 1966, so the price you pay for that safety is a very low income stream and the guarantee of zero growth," he says.
That cash might be better off in shares, funds, KiwiSaver, or even bonds (debt securities) and peer-to-peer lending.
Do a KiwiSaver audit
Many Kiwis are in the wrong KiwiSaver fund. Often they're in a conservative fund that isn't returning much growth. Use the sorted.org.nz KiwiSaver fund finder as a starting point, says Boyle. If you're taking a contributions holiday, then be honest and ask yourself if you will have sufficient money to retire on. Consider spending some time and money to discuss your KiwiSaver strategy with a financial adviser.
Get rid of failed investments
Some people don't like to admit they were wrong, says Lister, so it's easier to stick with an investment that has fallen in the hope that it will go up again at some stage. But sometimes we need to be ruthless.
"Holding on can compound the problem, and we might miss out on better opportunities elsewhere. Nobody gets 10 out of 10 right when it comes to investing. So there's no shame in cutting your losses and moving on when you need to."
The money can then be assigned to a better-performing investment.
Review insurance and utility bills
Are there cheaper utility deals around? Everyone should check if they can get better deals on power, phone, mobile and broadband. At the very least, call your existing provider and ask the call centre to analyse your spending and recommend a better deal. With house insurance, make sure you have sufficient cover to rebuild your home. Don't trust the automatic renewal or your insurer's online calculator. Be sure with insurance to compare like for like and think carefully before switching any health-related policy such as mortgage or income protection, critical illness or life insurance.
Put the kids on budgets
Children eat money. I know. I have two such specimens living under my roof. If your children have fixed budgets you know what they're going to cost and avoid family budget blowouts. There is no reason why they can't be given simple budgets to manage as early as age 5. Simply tell them how much money they get a week and what it covers. They could also have term budgets for after-school activities and school holiday activities. At the age of 5 and 7, my children had holiday budgets of $2 a day, which covered their treats while away. They learned to save it for a day or two for better treats. When they got to the ages of 8 and 10, I had to give them clothing budgets because I was being driven nuts by the demands. It was the best thing I ever did for their financial education.
Have a clean-out
Junk costs money to store. Having too much clutter in your house also means you sometimes can't find things and replace them unnecessarily, and also don't have the mental space to get your life and finances organised. My next-door neighbours are moving out to spend a year working and travelling in their motorhome. They've sold about 30 years of accumulated stuff, much of it that they didn't need - providing others with a bargain.