If you've got school-age kids, you'll be hitting the final countdown for school to go back. Some of us love the change of pace school holidays bring while for some of us the next week (or so) can't go by fast enough. Whichever group you're in, you'll be checking off stationery items, school uniforms, school bags and lunchboxes. You'll be thinking about schedules and school fees, and you'll probably be thinking about paying for it all.
No-one likes that bit. The big money hit just as you're Christmas credit card is due. Which is why once you've dealt with the kids' stuff, working through our 'back-on-track' checklist can help get your finances back under control and put you back in charge.
Week 1 – Reset
- Change your spending mindset. Over the holidays it's easy to get a bit slack about our spending. You're relaxed, you're enjoying yourself, the kids want ice cream, and hey you do too. Small spontaneous spending can build up to a lot of dollars. Don't beat yourself up about what you've already spent just think about what you're spending now – what's a necessary spend versus a nice to have. School expenses are a must spend, lunch orders for your kids and bought lunches for you are not. Start being conscious of what you’re spending on.
- Reduce the extras. Check-in with your bank accounts. What is your current balance? What did you spend your money on? While you’re there, what are the regular payments you have going out? Netflix, Spotify, Neon, Sky and news apps can add up to well over $100 a month. Keep the ones you love but cut out those you don’t. Even cutting a few of these can save you some precious dollars every month.
- Safety first. Take a few extra minutes to update your security. Current guidelines indicate we don't need to update our passwords every few months (hallelujah who even did that?) as long as our passwords are strong and unique, use 2-factor authentication where possible and, top tip, use a password manager so that you don't need to memorize them.
- Have a back-up plan. Now you know where you're at and are back in the driver's seat, make sure you have a safety net. Things are bound to go wrong at some point – usually when you can least afford it!! A car repair, broken phone, unexpected medical or dental treatment can throw any of us off track. As quickly as you can, set aside $1000 (ideally in a separate account) that will be used only for emergencies.
- Clear your debt. Ok, so you're probably not going to pay off your mortgage in just a few weeks. From step 2, you know where your finances are at. Make a list of all your debts (credit card, personal loans, hire purchase etc.) and pick one to pay off – it's a good idea to start with the one with the highest interest). Aim to put extra money into paying off that loan until it is gone. Even a regular extra $5 will clear it faster! Once you've cleared that one pick the next and pay that off and repeat.
- Protect what's important to you. Start with thinking about who relies on you financially; your children, your partner, or other whānau, and what they would need if you're not around to support them. That means sorting your life insurance and your will. Then consider your assets; your car, your contents and your house and make sure you've got insurance for those in place. Having insurance means that when something unexpected happens, your money is safe because insurance will pay for it.
- Consider your Retirement. The earlier you start your retirement savings, the more you'll have. Not just because you've had more time to put money in but because you'll earn compound interest. If you don't have anything in place yet do some research and consider KiwiSaver. If you do have a plan, look at how you're tracking. Use calculators to work out how much you'll need and whether there's a gap. Check your contributions, your tax rate, and that the fund you're in is right for you. Then sit back knowing your money is doing all the hard work.
Photo credit: Photo by Adi Goldstein on Unsplash
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