Source: Radio New Zealand
Set yourself a limit on how much money you spend on discretionary items. 123RF
Households around the country are under increasing financial pressure, as the cost of fuel rises – so what can you do if you’re feeling the pinch?
RNZ asked experts for their tips.
Cut spending
Enrich Retirement founder Liz Koh said people should look at their bank statements for the past three months.
“Categorise your spending into three groups – fixed expenses you have little or no control over, like rent, mortgage or insurance, discretionary expenses you have full control over and which are not essential, like lunches, coffees and entertainment, and the remaining group, essential expenses that you have some control over, like food and petrol.
“The easiest expenses to cut back on are the discretionary expenses. Set yourself a limit on how much money you spend on these items by either setting up a separate bank account to cover them or paying for them in cash.”
She said most people would find food was their biggest expense, after their rent or mortgage payments.
What are your money saving tips? Email susan.edmunds@rnz.co.nz
“Take a hard look at what you are spending. Set a limit on food expenses and cut back on the number of times you go to the supermarket.
“Depending on how big your family is, you may be able to save $100 a week or more on grocery items by planning your meals, buying cheaper brands and cutting out some items altogether.”
Move your mortgage
If you have a mortgage, you may be able to save a few thousand dollars by shifting to another bank or threatening to.
Banks have competed with cashback offers for some time and new customers are often offered up to about 1 percent of their loan amount as a cashback incentive.
Even if you don’t move banks, sometimes it is possible to ask your current bank to match a competitor’s offer with a “retention” payment of its own.
The payments usually come with rules around how long a customer must remain with the bank.
Review subscriptions
You might have subscriptions you aren’t using or that you haven’t reviewed in a while.
Koh said people should regularly review their payments for things like streaming services, websites and other memberships, and see whether they still needed them.
Some banks offer tools to help with this.
Think about how you drive
Kernel founder Dean Anderson said the cost of petrol and diesel would be the main concern for most households now.
“Most of us are still driving internal combustion cars and how we drive has a real impact on fuel use. With prices seeming to climb every other day, those habits matter.”
Things like driving slower and accelerating more gently can cut fuel use.
“Public transport is an easy win, if it’s a viable option for your commute. There’s also a Kiwi tech company, Extraordinary, that employers can set up to let staff pay for public transport from gross rather than net income.
“For an average commuter, that could mean savings of $700-plus a year, without changing your routine. Easy savings into your back pocket.”
Have an emergency fund
It might be hard to do at the moment, but building up a savings account to fall back on can save money in the long run.
When you have that buffer, you’re less likely to need expensive short-term debt to cover emergencies.
Consistency more important than timing
Pie Funds chief executive Ana-Marie Lockyer said people should set up regular saving and investment habits, not get stuck trying to time the markets.
“Keeping up regular contributions to things like KiwiSaver, even when markets feel a bit uncertain, is one of the most effective ways to build wealth over the long term.
“If people have the option, looking at ways to boost income – whether that’s through looking at growth opportunities in your existing job or a new one, picking up extra work or building new skills – can often have a bigger impact than cutting costs alone.
“Overall, it’s less about doing anything drastic, and more about staying steady and making small, sensible improvements where you can.”
Take advantage of the government KiwiSaver contribution
It’s not as much as it used to be, but it’s still worth getting the full government contribution.
Put $1042 into your KiwiSaver account before 30 June each year to have about $260 added.
Shop around
You may be able to save money or pick up additional incentives by shopping around for a better deal on your power, phone or broadband.
For example, Powershop offers a $150 power credit to new customers, Pulse Energy offers $160, Mercury has $300 for those who sign up for electricity, or a free Samsung product for people taking electricity and broadband contracts for a two-year term.
Powerswitch has previously said people can often save hundreds by moving to another supplier with a better price.
“Power, broadband and mobile plans are often very similar across providers,” Anderson said. “If you’re not locked into a contract, it’s worth reviewing your options.
“Switching can come with upfront credits, free months or discounted rates – small wins that add up over the year.”
Sell things
Earlier this year, Trade Me said that 75 percent of people had unused or unwanted items in their homes that they could sell.
It said, on average, each person had 19 things they could sell, which would have an estimated value of $1300.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
