You’ve finished the party season and your wallet is lighter than you’d like. Susan Edmunds looks at some financial New Year’s resolutions to get you on track.
I will pay more than the minimum payment on my credit card
Don't fall into the trap of paying off your credit card at the minimum rate. Banks usually require 3-5 per cent of the total each month, or $5 to $25, whichever is greater. If you have $2000 on your credit card, paying it off at $60 a month will cost you $2793 and take 34 months to pay with an interest rate of 18 per cent.
If you can pay it off at $200 a month, the balance will be gone in nine months and will only cost $2183.
I will close credit cards I no longer use
Even unused credit cards can be pricey. Each card could cost you up to about $90 a year in fees. Check what you are being charged and close any that are unnecessary.
I will start a savings account
If you open a savings account on January 1 and start saving $5 a day, by the end of the year you'll have $1825. ASB's Save the Change function rounds up electronic transactions and deposits the difference into your savings account. Alternatively, hold on to your change and put a little aside each week.
I will check my insurances are sufficient
If you have debt and kids, you should have insurance that at least covers the debt, so they are not left with a burden if you die. If you don't have a big debt such as a home loan or a family, it's worth looking into income protection insurance. You are more likely to be off work through illness than an accident and losing your ability to earn could make life tough.
I will check for a better deal on my bills
Use the Christmas break to find out if you could get a better deal on your power, phone and broadband. Powerswitch can offer a quick comparison. If you find a competitor offers a better deal, you may be able to convince your provider to match it. You will often get a better deal when you can bundle services together, such as mobile and fixed line, electricity and gas.
I will check my credit card and bank statements
Go through your statements regularly to make sure payments have not been processed incorrectly or put through twice. If you spot a dodgy one, go back to the retailer first, then raise it with the bank. Acting quickly is important as it can be hard for the bank to take action on transactions more than 60 days old. Make sure you're not repeating payments for services you no longer use.
I will give my KiwiSaver account a check-up
How much you put into your account and the type of fund you're in will make a big difference to the amount you end up with at 65. Use Sorted's Fund Finder or a service such as SavvyKiwi to work out if you are in the right fund. Higher-risk funds generally deliver better returns over the long term. If you earn $75,000 and are matching your employer's 3 per cent contribution, increasing your payment to 4 per cent will give you an extra $50 in the hand every week once you're 65. Fees will also make a difference.
I will ask for a pay rise
If your employer's business has been experiencing strong growth and you can prove your efforts have been a part of that, you could ask for a pay rise. First write a list of the things you've implemented successfully over the past year, the new responsibilities you've taken on and your plans for the coming year.
I will see if there is any money waiting for me
Check the IRD website to see whether the department is holding any money that belongs to you.
It looks after money that has been left untouched for six or more years in companies such as financial institutions or insurance companies. The website has a list of people owed some of the unclaimed $131 million.
I will save an emergency fund
Six months' worth of outgoings put aside in a bank account provides a buffer. If you have an emergency fund, you can handle a higher excess on your health insurance, which will make your premiums cheaper. You may also be able to arrange cheaper income protection insurance because you won't need it to start paying out as quickly. Talk to your bank about whether your home loan offers an offset product so money can be kept separate from your home loan but used to offset the interest.