Canny View: Keeping it simple

Geoff Wilson

There are a few basic things that immediately make me more prepared and happier to face the day: drink a strong cup of coffee (or three!), have a tidy desk, and create a "to do" list.

It's nice to know that I can establish a good start to the day with such simple tasks.

It got me thinking that people rarely take this approach with their finances. Often, financial matters are treated like an overstuffed, messy closet that needs to be dealt with but remains closed and put off for another time.

I can procrastinate along with the best of them yet putting things off just makes it more difficult to enjoy "down time" because there is this nagging sense that something important needs to be addressed.

The good news is that a few simple changes can immediately get your finances moving in the right direction. I have intentionally picked three things that you can and should do right away. Tackle those three, and you might just become motivated to do more.

The key part is to set yourself a deadline because there is no better motivator than a sense of urgency.

With less than two months left in the year, our thoughts are beginning to turn towards relaxation – Christmas, New Year, summer holidays – but this is also a great time to start making solid resolutions that can help get you closer to your financial goals, whether it's increasing your retirement savings or setting enough money aside for a down payment on a house.

Consider your retirement goals

It can be hard thinking about retirement, especially when it is a way off, but setting and working towards a goal for your retirement today will help improve your lifestyle choices later.

Yet, as the adage goes, if you don't know where you are going, how will you know when you get there?

Retirement is no longer the traditional ceasing of work aged 65 and leading a life of leisure. The new definition of retirement is being able to do what you want, when you want, and how you want. This can often comprise a fulfilling combination of quality leisure, satisfying work and self-improvement.

Take time to contemplate what gives you meaning and purpose, what makes you happy, and the legacy that you wish to leave behind. Consider where health, work, family, leisure and your home fit into this equation.

Once you have developed your sense of direction, then consider how your finances can help support you in achieving your goals.

Review your KiwiSaver

For most of us, KiwiSaver is the main vehicle that will help us reach our retirement goals. And, as with our cars, it's important to ensure that our KiwiSaver meets our requirements and runs properly and efficiently.

It's a good idea to spend some time reviewing your investments and making sure you're maximising your returns.

Check whether the fund you're invested in is appropriate for your needs and tolerance to risk. Ensure you are contributing enough to take advantage of the free government contributions (up to $521.43).

If you are currently contributing the 3 per cent minimum employee contribution from your salary, determine the impact of increasing your contribution rate to 4 per cent or 8 per cent. Increasing your employee contributions is one of the most effective ways to enhance your future savings.

Paying too much tax won't help you to reach your retirement savings goal, so it's important to check your Prescribed Investor Rate (PIR) is correct.

This defines the amount of tax you'll pay on your KiwiSaver investment income – if it's too high, you'll be paying tax you won't be able to claim back; if it's too low, you'll need to file a tax return and pay the outstanding amount.

Review all your insurance covers

Finally, take a good look at your insurance covers for personal, home, auto, liability, etc, to be sure that you have appropriate cover – and that you're not overpaying.

Establish whether you could increase some excesses to save on premiums or check if you have some unnecessary "extra" features in your policy that are an additional expense.

It also pays to compare insurance covers periodically - especially where you have a good claims record - as companies adjust pricing frequently to acquire new customers.

If in doubt, seeking impartial advice from an insurance adviser should help provide value for money cover, and peace of mind.

Strengthening your finances shouldn't require a complete overhaul your life; a few easy tasks can set you on the right path, and, more importantly, help ease that nagging feeling that you are neglecting something important.

Sometimes the simplest of actions can give you the greatest peace of mind.

• Geoff Wilson is a Registered Financial Adviser and KiwiSaver adviser at Stewart Group – a Hawke's Bay-based independent financial advisory firm based in Hastings. Stewart Group works with individuals, families, and businesses in New Zealand who are committed to pursuing financial planning and wellbeing. Our clients understand the value of independent, goal oriented and objective financial advice that is free of conflicts. If that sounds like you, we would love to hear from you.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961.