Day 1. Darryl from HR shoves a KiwiSaver form in front of you. He wants to know how much you're going to contribute and needs the form back in 26 minutes. What do you do? Go.
Step 1 - Figure out why you're actually putting money into KiwiSaver.
We have already written about when you can withdraw your KiwiSaver funds here. Read that, because it only takes 5 minutes. If you can't be bothered, just know it basically comes down to whether you want to withdraw your KiwiSaver money in the short term, like buying your first home, or in the long term, like when you retire. This should factor into your decision.
Step 2 - Ask Darryl how much the company will pay towards your KiwiSaver.
They're legally obliged to pay 3%. If that's the case, then skip to step 3.
If it's 4% or even 8% (you lucky bugger) then you have to put some thought into this one. Think about it, if your employer is willing to match your KiwiSaver contributions up to 8% that's pretty great. Based on a $60k salary, changing your KiwiSaver contributions from 3% to 8% means you'll be paid an extra $2,100 per year in contributions from your employer. That's the equivalent of getting a $3,200 salary bump, for doing literally nothing other than increasing your own contributions.
Combined, you and your employer will go from putting $3,060 into your KiwiSaver account each year at 3%, to a whopping $8,160 at the 8% rate.
Step 3 - Look at your budget, and determine what you can afford
If you haven't got a budget yet, do it. There's a really good one on sorted.org that you can find here.
If things are really tight week to week, contributing more than 3% into KiwiSaver might not be a good call. But if you find you're spending your extra cash on unnecessary lay buy purchases online, and smashed stone-fruit on toast with a sprinkle of feta, you might want to consider upping that contribution instead.
Step 4 - Tell Darryl to back off
In all seriousness, he can't force you to make this decision in 26 minutes. Tell Darryl you need a day or two to think it through, and you'll get back to him as soon as possible.
This is when you might want to talk to a financial adviser. Their help is free, and they're really experienced at this sort of thing. Pick up the phone and have a quick yarn with your person before making the call. We have a select few really trusted advisers that can help you at any time, just get in touch.
An example of a handy thing they'll say: you can change your contribution rate whenever you like. So if you do choose a higher contribution rate and find that you're struggling financially, it's not a big deal to drop back down to the 3% mark.
So there it is. A step by step guide to making a call on your KiwiSaver contributions. If you have any more questions (like which fund to choose) check out our other posts or chat to one of our trusted financial advisers.