Let me start off by saying this doesn’t mean I’m working 7 days a week, staying in on the weekends, or living off noodles and toast and whatever my parents will give me. Really it just means I’ve decided to pay a bit more attention to my finances, and educate myself on a few of the basic things about money that I now realise we really should have been taught at school, but weren’t.
It’s a bit frustrating, because we learned about trigonometry, but not how to make a budget, or get a mortgage.
Call it financial knowledge, responsibility, planning, whatever. This is the stuff that I’m glad I now know about.
I’ve been fortunate enough to find myself in an environment with access to a massive amount of financial knowledge. I realised that not everyone is that lucky, and a lot of this information isn’t easily available to people. Or, if it is, the way it’s written makes it seem so complicated, that after 5 minutes of reading most of us want to throw it all in the too-hard basket, and just hope for the best.
So here we are. Ducks in a Row. This is my attempt at helping people learn more about their money :)
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Whatever your age, you might be thinking there’s time to figure this all out later. But one of the first things I found out - the sooner this gets sorted, the better.
Timing is one of the most important factors in this whole equation. And the earlier you roll up your sleeves, and get your head around it all, the better.
I’ve broken it down into four key elements. These are the most important “ducks” that I think everyone needs to get in a row.
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My Spending Behaviour
People (like my parents) used to tell me I needed a budget. My response would consist of a small eye roll and a quick subject change. I’ve always had a job, and been relatively careful with spending - so I thought it didn’t apply to me.
Then my bank released an app that tracked my spending. When I actually started looking at where my money was going, it was a wake-up call to say the least.
Food, coffee, and new clothes was the bulk of it. And some small tweaks meant some big savings.
Budgeting is pretty straightforward, and sorted.org has a really good tool.
The more important thing I learned however, was about my long term behaviour. Have you ever felt like no matter how much more money you make, say when you shift jobs or move from part time to full time, you never actually have any more money?
I found out it’s because of something called Parkinson’s law. Basically, unless we pay attention and really question our spending, it will increase with our salary. Meaning we never save anything, and just incrementally spend more and more throughout life.
I wrote a whole blog about it here. Have a read later on.
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My KiwiSaver
This one is really important. After all, it’s my nest egg. Almost everyone I know is in a KiwiSaver scheme. But when we’re asked about what provider we’re with, or how much our KiwiSaver is being taxed, we don’t really have an answer. I was even fuzzy about exactly when I could withdraw my KiwiSaver money.
When we start working, we get set up with KiwiSaver. Most of us are enrolled in a default scheme, and put in a fund that doesn’t necessarily match our financial goals.
For most of us, our KiwiSaver account is one of our biggest assets. We should pay at least some attention to it.
After some research, I learned about a few key factors that every one of us should sort out. Not doing so could easily mean $300,000 less in our KiwiSaver account by the time we’re 65.
The major ones are your provider, the type of fund you’re in, your employer’s contributions, and your tax rate.
If you want to know more, and potentially end up with way more money for your first home and your retirement, then read my other blog on this here.
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My Insurance
Insurance. What a boring, morbid topic. What happens if something goes wrong? Ugh.
Like maybe some of you reading this, I used to have that “it won’t happen to me” attitude. Problem is, shit does happen.
I’ve learned that insurance isn’t just for things like your car or your house. There are other, really important types of insurance, that relate to everyone’s most important asset - their ability to earn money in the future. It’s so important that I’m not even going to send you off to a separate blog post. I’m going to tell you about them now. Right here.
1. Medical/Health Insurance - People do tend to know about this one. It that covers medical bills if you get sick, it gets you immediate treatment instead of waiting, and it gives you access to non-Pharmac funded drugs (of which there are heaps).
Kiwis use their medical insurance an average of 4 times before they turn 65.
2. Income Protection - An important, and more unknown type of insurance. If something happens and you can no longer work, this type of insurance will pay a % of your salary, ongoing. As long as you can’t work, you’re still getting paid.
People get tripped up here because they think ACC has their back. But ACC only covers accidents, no diseases, mental illnesses, or a host of other issues that stop people from working.
1 in 5 Kiwis will claim on their income protection policy.
3. Trauma - A big old lump sum payment of money, if you get diagnosed with a serious illness.
The biggest claim here in New Zealand is for cancer. 1 in 3 Kiwis claim their lump sum trauma payout.
The beauty of this one is a lump sum of money into your bank account, with no strings attached. You can use it for alternative medical treatment, mortgage payments to release financial pressure - anything you want.
4. Life - Another more familiar type of insurance for a lot of people. If you’re diagnosed as terminally ill, or you pass away, your family gets a big lump sum payment. This can help them pay off debt, and relieve some financial pressure in a very tough time. It’s important to have a Will that details who this money should go to, otherwise a court will decide. This is a perfect segue into my fourth and final topic. Wills.
If you would like to know some more on the insurance side of things, I’ve broken it down further in, you guessed it, another one of my blogs.
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My Will
Okay so if you thought insurance was morbid, you’re going to hate this one. But you just have to get it sorted. At the end of the day, we’re all going to the same place, and we all need a will.
Thinking about this topic can make people sad or uncomfortable (it did to me) and that’s totally normal. But in the interest of your family and friends, try to treat this as a practical task, grit your teeth, and get it done.
My first thought was something along the lines of “I have no assets, so I’ll worry about this later when I’ve got kids and stuff.”
The problem with that? Almost all of us have assets, we just don’t realise it. My KiwiSaver account, my car, my laptop and inherited jewellery all count as assets. Without a Will, no one knows where those things should go in the event of my death.
If we die without a Will (called “dying intestate”), it’s a huge hassle for everyone we leave behind. And when you think about it, they’re already going through a tough time, so why make it harder on them?
Essentially the court can freeze the assets, and no one can access them, not even your parents. They have to go to court, pay legal fees and wait 6 months or longer to get it all sorted. If you have business assets, a whole extra layer of complication is added.
The easiest way around it? Leave a straightforward Will, stating exactly where you would like your assets to go in the unfortunate event of your death. Then update it for big life events i.e. marriage, new kids, just won Lotto etc.
Getting a Will is so important, we have teamed up with a company that specialises in this area. Their name is Perpetual Guardian, and they’re great. If you go through Ducks in a Row, you’ll get a significant discount - so you can have your Will created for as little as $50.
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So, what’s the best way to get this stuff sorted?
Ask for help. There are quite a few moving parts, and considerations to be made.
I have set up Ducks in a Row in a way that gives us access to a few of New Zealand’s top Financial Advisers. The best part, their help is 100% free.
They can sit down and look at your financial situation, and essentially get your Ducks in a Row for you. By law, everything is kept totally confidential, and the advice they give you must be entirely independent.
The reason their help is free? They’re paid by the insurance companies, only if you decide to take out an insurance policy, but there’s absolutely no pressure to do so.
If you’re thinking it’s time to get your Ducks in a Row, great. Just click below, and tell us a bit about yourself. We’ll do the rest.
- Jess
Co-Founder