Month: March 2018

LIVING THE KIWI RETIREMENT DREAM?

A retired couple in New Zealand are living the dream. They have a mortgage free property and save at least $1000 from their pension (called Super in NZ). This money goes into their cheque account to be used for emergencies and bills such as visits to the dentist, car repairs, and rates. They had 40k in that account.

Now I don’t want to state the obvious or ask stupid questions. But…

Wouldn’t some of that money have been better invested elsewhere earning at least a good interest rate or in some form of managed funds where their savings could have increased in value?

This couple lived frugality and as a result found it easy to save. It appears that travel was not part of their retirement plans. I think most people would want to do stuff in their retirement years which included overseas travel so this couple’s system of living is not for everyone. The point being that it is up to everyone to select their own system of living which financial planning is a big part of. This couple’s lifestyle is not for everyone including yours truly but who is to say that its right or wrong. “Everyone’s to their own” as the saying goes.

This example does show that the habit of saving a portion of your money every pay day can make life easier for you later on in your life.

www.robertastewart.com

 

Setting  Priorities

Setting priorities for your finances is a personal thing. There is no size fits all because everyone’s circumstances, goals, and priorities are quite different and unique. What may work for one person may not necessarily work for another person or family.

So how do I prioritise my spending?

The first question is “Do you have any debt.”?

If you have a bit of discretionary money, that is money which you are able to decide what to spend it on then reducing your debt has to be a priority but then again it all depends on whether it is consumer debt, a student loan, or you have a mortgage. Getting rid of credit card or hire purchase debt has to be your number one goal because that interest quickly adds up. The crunch always comes when you have to pay it back and some people who took on loans without giving enough thought to repayments got a rude awakening when their statements arrived through the post or in the email.

You may not have any debt but will still have other priorities.

Your age has a lot to do with it and in saying that I am not suggesting that your age will determine whether you are going to get married, have kids, go on your big OE (Overseas Experience), learn to drive, or study because people do all these kind of things at any age these days. I am not suggesting for one moment that you take out a 30 year mortgage when you are 80 or train for a marathon when you are 100 though there is no law to say you cannot do these things. Evenone to their own I suppose.

Priorities change throughout your lifetime. What may have been important to you during your teens and twenties may not be of interest to you during your thirties and forties. Then stuff happens which can change your priorities. You may get ill or hurt in an auto mobile accident or at work which can change your priorities.

It really is up to you to decide what is important to you and your family if you have one. As I said at the beginning of this piece, “There is no size fits all” and what your priorities are dependant on your goals and circumstances.

Irrespective of who you are and at what stage of life you are at, it is important that you have a plan in place, that you have goals, and that you decide where you are going otherwise you will be like a life raft that is out on the ocean. It is at the mercy of the waves and will end up where the waves will take it.