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If you are starting the New Year with a leaner bank account than you would like, set some resolutions now to make 2016 the year you get your finances on track.
1) Make a budget
Work back through your bank statements and determine what is coming in, what is going out and where it is going. Then you can determine what you might be able to save. From your next pay, start moving that money destined for savings (or debt repayment) as soon as it lands in your bank account.
2) Have goals
Write a list of the financial goals you'd like to achieve this year, then work out what you need to do to achieve them. How much do you need to transfer to your credit card each payday? What do you need to be saving monthly to hit your target on time?
3) Check you're getting the best deal you can
If you've got some time off, use it to see if you can save money on your bills. Powerswitch.co.nz will tell you if you could be getting a better deal on your power bill. Ring other mobile and broadband providers to see if they can beat the deal you've currently got.
4) Cut your mortgage
If you pay your mortgage monthly, switching to half the amount fortnightly will mean an extra full payment each year. Better yet, each year reduce the term of your mortgage by an extra year. Someone paying off $200,000 would pay $1319 a month over a 20-year term. If after one year, they reduced the remaining term to 18 years, rather than 19, their payments would increase by less than $100 a month. But do this every year and you will save a huge amount of time and money.
5) Work out whether your KiwiSaver account is on track
Check out Sorted.org.nz's calculators to work out what you are on track to save and how much that would mean in income per week. A 30-year-old woman earning $60,000 who has been in KiwiSaver since the beginning and contributes 3 per cent is set to have about $250,629 in her account at 65, which will mean roughly $256 a week. If you worry you might not have enough, you can contribute more or consider a riskier fund to generate better returns.
6) Get your full member tax credit
While you're there, don't miss the chance for free money. Everyone who saves at least $1042 in the year to June is eligible for the full member tax credit from the Government of $521 in their KiwiSaver accounts. If you earn less than $34,000 a year or do not regularly contribute to KiwiSaver, you might need to top it up to qualify.
7) Set up automatic payments
Don't miss out on the discounts available to those who pay bills such as electricity on time. Set up payments for just after payday, so that you know all bills will be paid and you will not incur any late fees. Set up a separate bills account for these APs if you need to, and transfer the money in there as soon as you get it so you are not tempted to spend it.
8) Review your credit cards
Credit card debt is expensive. If you have any you can't pay off in full by the time its interest-free period expires, look into a transfer rate with another bank. Many of the big banks are offering no-interest cards at the moment to people who move their balances across. The trick is not to rack up more debt while you are paying it off.
9) Set up a bank account for your kids
Even if you can only transfer a small amount of money into their account each month, showing your kids how savings works will give them valuable life skills.
10) Review your insurances
Is the sum insured for your house right? Do you have enough personal insurance cover? Insurance is something you hope you never need but get it right to ensure peace of mind this year.
Written by Susan Edmunds. First appeared on Stuff.co.nz.
Related links:
10 apps to help you budget this year
Your post-Christmas financial detox
Why 2016 is the year everyone should ask for financial advice