The New Year is just around the corner so here are our top five tips to get yourself in the best possible financial shape for 2020.
1. Pay yourself first
This is number one to acknowledge that you are the most important person when it comes to taking ownership and responsibility of your financial situation. The only way to better your financial position is by sticking to good spending habits which start with you committing to a savings plan.
A lot of people set all their payments (bill’s, utilities, etc) to come out first, straight after their pay goes into their account. Then they buy food and personal expenses and if there is any money left at the end of the week they have the intention to save this. The problem with this is that often people spend what they have and at the end of the week all the money is gone.
Paying yourself first (meaning transferring money for you into a separate savings account) as soon as you get paid will ensure you are improving your long term financial position over time. The best part is that when this method is used people often find they don’t miss the money.
2. Set a budget and stick to it
Taking control of your finances can be incredibly empowering and is easy with a plan. Prepare a simple budget making sure you are taking into account all your bills, expenses and allowances for all the normal ‘luxury items’ and savings. Whatever is leftover is your spending money and you need to stick to this.
3. Repay/Reduce consumer debt
Set out to repay and reduce all consumer debt, credit cards, personal loans and hire purchases. Increase the regular repayments on these even if it's only $10 per pay cycle. A helpful tip is a lot of the banks allow you to reduce the limit of your credit card online so reduce the limit each time you pay off $500 so you don’t have the temptation to re-spend.
4. Join Kiwisaver
Kiwisaver is a great way to improve your long term financial position and also unlocks a lot of potential grants and kick starts if you are a first home buyer. If you aren’t a member, join today ... and if you are, then review your provider and make sure your investment nest eggs are in the right fund for your age and long term retirement goals. All Kiwisaver providers have financial advisors who can help you through this to ensure you are maximizing this long term savings plan.
5. Pay extra off your home loan
If you are a home owner you can save a huge amount of interest over the term of your loan by paying extra. A helpful tip is to get the loan calculated over the standard 25 years and round the weekly payment up to the nearest hundred.
Example: For a $300,000 loan on 3.99% over 25 years the weekly repayment is $365 p.w If you round this to $400 you will pay the loan off over 21 years and 7 months as opposed to 25 years, and save $27,234 in interest over the term of the loan!
2020 is shaping up to be an interesting year in the housing market. Home loan rates have continued to fall over the last year and the banks continue to fight for their share of mortgage business which has seen them pass these lower rates onto the consumers through some exceptional ‘specials’.
Some areas of New Zealand are seeing a shortage of housing which has stalled the market and all of this means now is a good time to buy! Talk to us here at Stephanie Murray Mortgages and we can coach you through the process and talk about how we can help.