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Don’t make money your first goal

Don’t make money your first goal

Written by R. A. Stewart

To live a purposeful life one has to do something meaningful and that usually involves some kind of activity which does not involve getting paid or which costs you money.

Of course your first responsibility is your commitments. Take care of those but also spend some time doing whatever you enjoy doing, then you will have something to look forward to when you get home from work.

This is particularly so if you are in a job you hate.

It is soul-destroying when all you have to look forward to is your paycheck every week or month, and once that is gone you go through the same process over and over again.

There are some ways of getting out of a rut and one of these is to up skill but even that does not work for some people. I have known people to take courses in various subjects in order to improve their chances of getting a higher paying job and they still never seem to rise above working in a job which pays the minimum wage.

Paying for higher education with a student loan can pay off but if you are going to take this route then you had better make sure it is something you want to do otherwise it will be a waste of time and money. The key thing is to know how you are going to use this education. It will be a good idea to make a list of the jobs which you are available with the qualifications you are seeking to acquire.

It is important to do things for the right reasons and not try to fit in with what others are doing.

I have known people who have gone into study simply because others are doing or to impress others because they appear smart. Usually there is no thought of what they are going to do with their newly acquired skills, that is, if they have passed their exams.

Getting a higher paying job may not be all that it is cracked up to be if you weigh up all of the pros and cons. There are some things to consider.

  1. Will the increased income move you up to a higher tax bracket?
  2. Will you be spending less time with your family?
  3. Will you have more responsibility?
  4. Will you have to do more travelling as part of the job?

The bottom line is the extra stress which goes with the position may not be worth it and you may not be all that much better off financially anyway.

Life has to be lived in a balanced way in order for it to be meaningful. The bills have to be paid, but if you are able to turn a hobby into an income stream then you are living the dream. An ambition has to involve more than just earning money to buy stuff. Experiences with others cannot be purchased with money. Our family’s tradition was our Sunday afternoon game of cricket and it all began with just a cricket bat. We used boxes for wickets to start with then we cut up some saplings to use for wickets.

It just goes to show that you don’t need much money to create lifelong memories.

About this article

This article is of the opinion and experience of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. 

Read my other articles on www.robertastewart.com

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Who do you take Money advice from?

Who do you take Money advice from?

Written by R. A. Stewart

Everyone has some form of advice on what you should do with your money. From co-workers and family members to bloggers and those who are qualified to provide financial advice. A lot of people will have some form of opinion on what you should do with your money. So much so that it pays to not speak about your financial affairs with anyone; not that it is any of their business.

There are some red flags to note from any of these so-called financial experts. These red flags are just as applicable to the man in the street as they are to a qualified financial advisor.

Red Flag number one: The advisor has no money

I knew someone who turned a couple of hundred dollars into $6,000, then $10,000, then $20,000, and more. In the early stages when he had $6,000, his colleagues suggested to him that he should get a deposit for a new car with that money. I said “That is the stupidest advice you could ever get because not only will you end up with nothing but you will have a debt.” 

He ignored his colleague’s advice.

I told him that he should at least deposit at least $1040 in his Kiwisaver in order to get the $520 government money in July. I don’t know if he followed that advice.

Red Flag number two: They do not know anything your your personal circumstances

If you receive financial advice from someone who does not know a thing about your financial situation then treat that advice with some kind of scepticism. The advice and acting on it must be based on your personal circumstances and your goals for the future. Your age and health are other factors which have to be taken into account. It is your responsibility to make it known to a financial advisor what your future plans are but that does not mean that you should just reveal all to a random cold caller. Use your discretion and common sense when discussing anything with others. 

Red Flag number three: They advise you to invest your life savings in one company

This is a major red flag! Diversification spreads your risk but plunging all of your money in the one company can lead to financial ruin and affect your lifestyle big time. It may be true that there are some people who made a killing by plunging but it is equally true that a lot of people lost everything they invested. The only reason why a paid financial advisor would tell you to invest all of your money in the one company is that they are more interested in their commission rather than your financial well-being.

Red Flag number four: You are advised to invest in cryptocurrency

This is a major red flag. No one should ever advise you to invest in any kind of cryptocurrency. This is a high risk speculation rather than an investment. Only discretionary spending money should be used for purchasing Bitcoin. If you are young and have no commitments then buying Bitcoin will provide you with a bit of excitement, but it is certainly no substitute for your retirement fund.

Red Flag number five: The advice is unsolicited

If you receive a cold call from someone claiming to be a financial advisor then hang up or delete the email. Tell them that you already have an advisor. Whatever you do, don’t engage with them. If you have responded to anything they have said, then say, “Let me talk to my financial advisor first.”

A typical scammer does not want you to talk to anyone else about their so-called opportunity.

Learn to spot the terminology these scammers use in their correspondence and it will help you to avoid becoming their next victim.

About this article

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog, website, or ebook. Read my other articles on www.robertastewart.com

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How to respond to financial setbacks

 

Written by R.A.Stewart

In 2008 during the Global Financial Crisis, a company I had money invested in went bust. I had close to 7 grand invested in it but my initial investment was 5k. The interest rate the company offered investors was higher than what you would receive if investing for a fixed term with the banks. 

I had smaller amounts invested in other companies which went bust.

The company had assets in property and I thought that at least they had assets which could cover the loan if they ever went bust. Problem was, their assets were worth less than their liabilities.

It reminds me of the 1987 sharemarket crash, also known as “Black Monday” when investors borrowed money using the value of their shares as collateral and as the value of shares increased investors were able to borrow even more. 

That is until the crash when the value of their portfolio was worth less than the money owing on them.

A guy I worked with told me that he had mortgaged his house to purchase shares and was left with a debt which at that time will take years to pay off.

There are several ways in which people respond to financial setbacks such as those that have been described. Here are three:

  1. Stop investing in the markets

Some people who got their fingers burnt during Black Monday, stopped investing at all and just left their money in an ordinary savings account. These people may have avoided future share market shocks but they have also missed out on the market rises. Savings which are just left in a personal bank account will lose money if it is left there for any length of time when you consider the effect of inflation and taxation.

  1. Blame Others

During the Global Financial Crisis (GFC), a lot of investors lost money that they had invested in finance companies. A few had their entire life savings invested in some of these companies. Many blamed those in charge of the company for it going under. Not one of those who were interviewed by the TV reporter who covered their meetings took responsibility for their situation or even admitted that they made an error in placing all of their eggs in the one basket. Why did they not diversify their portfolio in order to minimize the risk of losing everything in one hit. Placing all of your eggs in the one basket is just like going to the races and putting all of your money on the one horse. It is easy to be upbeat when things are going well, but try getting along with someone who has taken a heavy loss.

When choosing where to invest, the question one has to ask is, “How will the loss of this money affect my lifestyle?”

Greed gets the better of some people, so much so, that they ignore all of the telltale warning signs. 

Financial experts warned investors about the risks of investing in financial companies which offer high interest rates, saying, “The high interest rates do not reflect the risk investors are taking with their money.”

  1. Learn from the experience

Then you can take it on the chin and accept that you made an error of judgement. Experience is an expensive teacher but you have to invest in order to gain experience and become financially literate. It is important to get over the fear of loss when investing for the long term. If you are investing for the short term such as for next summer’s vacation or for a car then you may want to invest conservatively.

The question that needs to be asked is, “How will the loss of this money affect my lifestyle?”

When I say loss, I mean if the share market drops by 5% or more. You lose only if you sell your shares. A 5% drop in the market is not a problem for those investing for the long or medium term. 

The only way to get experience is to invest. Experience is your best teacher; this applies to any job or activity which you undertake. You will make mistakes; don’t beat yourself up or blame others; learn the lesson and take that into your future decisions.

About this article

This article may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. 

Read my other articles on www.robertastewart.com

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Your Money Your Responsibility 

Your Money Your Responsibility 

Written by R. A. Stewart

Your money is your responsibility. It is your choice what you do with it once it becomes yours, but you have the responsibility of how you manage your money. Being a good steward of money means being responsible for how you use it. This requires maturity.

Here are the main factors which will help you become a good steward of money.

  1. Gaining a financial education

It is your responsibility to become financially literate. In this day and age where there is so much information available on making the most of your money, it is inexcusable to be financially literate. 

All it may take for you to find books on personal finance is to just visit your local library. If you are prepared to spend a bit of money then you may find some good books at your local bookstore.

Frances Cook, Mary Holm, and Martin Hawes are excellent New Zealand authors of Financial books.

  1. Make your own decisions

Some people will get others to make decisions on their behalf, so that whenever something goes wrong they always have someone to blame. “You told me to invest in such and such company and now I have lost my money.” It is your money so that it is your responsibility to make the most of it. 

  1. Accept your own mistakes

Investing is a learning process. In order to become a good investor you need to invest and gain experience doing so. Mistakes will be made. The important thing is to learn from them and move on. 

  1. Living within your means.

It is your responsibility to live within your means. This means that if you choose to get married, have kids, or buy a car, then it is your responsibility to ensure that you are in a suitable financial position to do these things. 

  1. Pay all of your bills

Everyone has fixed costs such as utilities, phones, and whatever. It is the responsibility and the mature thing to pay all of these on time. A bad credit rating can hurt your chances of obtaining a mortgage in the future.

  1. Save a portion of your income

It is your responsibility to save a portion of your income to provide some kind of cushion for a future financial setback. Establishing a rainy day fund is always suggested by financial experts.

  1. Listen to wise advice

The markets went up and down and they were all down after President Trump announced tariffs on overseas imports to the US. The experts in New Zealand were advising investors to remain calm during this time and not to react to the market slide by changing funds. “This is the nature of the markets,” they said. Many did change funds and when the markets recovered the losses, these people missed out on the gains. As a result, their kiwisaver balances took a hit. 

Your financial plan has to take into consideration the market volatility. The question is, “If the market dropped 5% or whatever, how will this affect my lifestyle?”

If you have ten or so years remaining till you retire then the answer is that it won’t in the short or medium term. 

It is your responsibility to heed advice when it is given but at the same time have the common sense to know whether the advice is good or bad.

Once you have gained enough experience at investing you will have the know how to discern whether advice is good or bad and what the motive is behind the person giving the advice.

About this article: The opinions expressed are those of the writer and may not be applicable to your personal circumstances therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Read my other articles at www.robertastewart.com

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The Percentage Formula

The Percentage Formula

Knowing how to work on percentages is a benefit in the area of finances.

If you are figuring out the return of your investments, you will need to know how to calculate percentages. 

Here is an example:

Your return on an investment of $100 is $7. The formula for working out your return in terms of percentage is:

(a) 7 multiplied by 100 =700

(b) The answer is a being divided by 100= 7%

Your return $7 is multiplied by 100

Your investment of $100 is divided by 700

Shirley has $5,000 in her personal savings account and has received $100 in interest off that money. In terms of percentage, what is her return on that money?

(a) $100 multiplied by 100 =$10,000

(b) 10,000 divided by 5,000= 2

Shirley has received 2% interest on her money.

This formula does not include tax so supposing Shirley pays 17.5% tax.

The formula for working out the tax which needs to be paid on interest is straight forward; it is:

Interest received (income) multiplied by the individual’s tax rate (17.5%).

In Shirley’s case, this is $100 multiplied by 17.5% equals $17.50.

Her net return on her money is $82.50.

17.5% is 0.175

An example such as this shows us the futility of just leaving your money in the bank without investing it. The combination of inflation and taxation means that those who do not invest are losing the value of their money. 

Saving money is a good habit to get into, but it is also important to get into the habit of investing. This increases your financial literacy.

Some people do not invest their money because they are afraid of losing their money, yet they will buy lottery tickets which is a sure-fire way of losing. 

Knowing how to figure out percentages is a skill which will assist you in different areas of your life.

Here are some examples of where knowing how to calculate percentages will be a valuable skill.

Shopping & Discounts: Calculate discounts during sales (e.g., “30% off”).

Tips & Service Charges: Determine how much to tip at restaurants (e.g., 15% or 20% of the bill).

Tax Calculations: Compute sales tax (e.g., 8% tax on a purchase).

Budgeting & Expenses: Track spending (e.g., “20% of my income goes to rent”).

Loan & Credit Card Interest: Understand interest rates on loans or credit cards.

About this article:

You may use this article as content for your website/blog or ebook. 

www.robertastewart.com

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The Cost of Financial Illiteracy

Written by R. A. Stewart

There is a cost to financial illiteracy and this cost can be passed down to generations and society. Financial illiteracy leads to poor decision making, debts, and missed opportunity for wealth building. 

  1. Poor choices

Financial illiteracy leads to impulse spending, living beyond one’s means, which leads to financial problems. All of this leads to borrowing which in turn leads to debt. Such people are often vulnerable to loan sharks which leads them to a cycle of debt.

Not surprisingly, these people have no savings, therefore, are caught out when some unexpected bill arrives such as an appliance breaking down, or the car needs fixing.

  1. Increased Debt and Financial Stress

Being unable to pay bills on time will lead to financial stress and mental health issues. It will also lead to relationship issues as lenders are sometimes family members who lend money, often with no interest attached may not see their money again. The borrower will sometimes use the excuse, “I did such and such for you”, in order to squirrel out of repaying the loan. This leads to resentment on the part of family members.

Smart money managers will not borrow for consumable items. “If you don’t have the money, you don’t buy it” is a good rule to live by”.

  1. Missed Investment opportunities

People with no financial literacy will not invest their money and therefore miss out on the opportunities to increase their wealth.  They will leave their money in a personal savings account which pays little interest which does not even cover the cost of inflation. As far as retirement goes, they have little savings to fall back on in later years.

  1. Vulnerability to Scams and Fraud

Financially illiterate are unaware of the red flags which are common in scams, therefore, are vulnerable to be taken in by them.

  1. Higher costs for Financial Services

A financially illiterate person will choose financial services and insurance not applicable to their needs or accept advice which is not compatible with their personal circumstances.

  1. Impact on Future Generations

Parents who are not financially literate may pass on their traits and attitudes to their children, passing on their poor financial skills to the next generation. This could also mean that they are unable to contribute to their children’s education, limiting future opportunities.

  1. Health and Lifestyle Consequences

Poor financial choices can also lead to poor health outcomes. It can also inhibit your ability to purchase a home, start a business, or pursue higher education.

  1. Limited LIfe Choices

Lack of financial skills will inhibit your ability to enjoy a more fruitful life. If you are not living within your means then overseas travel, further education, and starting a business will all be out of reach. Certainly, people who have no savings whatsoever are not fit to be in business because if you cannot even manage your own money then the lack of financial management will mean certain failure for the business.

“Financial literacy is not an expense, it’s an investment in your future.”

About this article

You may use this article as content for your blog/website, or ebook. Read my other articles on www.robertastewart.com

The content of this article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised.

Retire on a Shoestring

“Retire with Little Money” is your guide to achieving financial freedom, even if you don’t have a large retirement fund. This practical ebook reveals creative strategies and smart budgeting tips to help you retire comfortably on a modest income. Learn how to cut unnecessary expenses, boost your savings with side gigs, and make the most of the resources available to you. With easy-to-follow advice and real-life examples, this book shows you how to build a sustainable retirement plan without relying on a hefty nest egg. Start planning today, and discover how you can retire sooner than you think!

 

https://robertalan.gumroad.com/l/sdzvl

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3 Things a Financial Advisor should not tell you

3 Things a Financial Advisor should not tell you

Written by R. A. Stewart

Having a financial advisor is one thing but at the end of the day it is you who has to make the decisions of where to invest your money. In other words; you must take full responsibility for your actions. You must also have the ability to discern whether a piece of advice is good, bad, or not applicable to your personal circumstances.

Here are some things a financial advisor should not tell you to do.

  1. Invest in cryptocurrency

Only money that you can fully afford to lose should be invested in bitcoin or other types of cryptocurrency. This is an extremely volatile investment with a short history, therefore it is hard to know where it is heading as far as the price of Bitcoin goes. Anyone who claims to know the future of Bitcoin is probably misleading you. It is likely that they are using data from Bitcoin’s history to predict its future but as they say, “The past is no guarantee of the future.”

Only discretionary spending money should be invested in Bitcoin. It will give you plenty of interest while investments which are for your material goals are growing as you continue to save for whatever it is you are saving for, whether that be a house deposit, car, education, or overseas trip.

  1. Invest your life savings in one company

There is a phrase for this and it is called, “Placing all of your eggs in one basket.” During the Global Financial Crisis of 2007/2008 some New Zealand investors lost their entire life savings after some high profile company collapses. Several finance companies were offering above average interest rates to attract investors and some people let greed get the better of them, but no one would admit to such a sin. Financial advisors who promoted these finance companies were scapegoats. It may be true that it is a mistake to advise someone to invest everything into one company but it is up to each and every investor to take responsibility for their own investment portfolio.

Diversification needs to be part of your financial vocabulary if it already isn’t. Diversification means you invest your money with different companies and across several asset classes. This minimizes risk. Ordinary Mum and Dad investors are able to drip feed small amounts of money into the markets these days with so many online investing platforms available. It is just a matter of choosing one or two of them which fits in with your investing strategy.

  1. Invest in growth funds when you are retired

Investing in growth funds is okay when time is your friend but not when it is your enemy because a market slump can affect your lifestyle if you are retired. This is because retired people are in the spending phase of their life and if the value of your portfolio is down when you need the money then you are accepting a loss. The young ones, however, do not need to panic because they have time on their side and do not need the money in a hurry. By the time they themselves retire the market will have had it’s ups and downs.

I am not saying that you should not have anything invested in growth funds if you are retired, but rather, it should not be money which you can ill afford to lose. It all boils down to how soon you may need the money keeping in mind that time is not your friend.

About this article

The information in this article may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. 

Read my other articles on www.robertastewart.com

Retire on a Shoestring

“Retire with Little Money” is your guide to achieving financial freedom, even if you don’t have a large retirement fund. This practical ebook reveals creative strategies and smart budgeting tips to help you retire comfortably on a modest income. Learn how to cut unnecessary expenses, boost your savings with side gigs, and make the most of the resources available to you. With easy-to-follow advice and real-life examples, this book shows you how to build a sustainable retirement plan without relying on a hefty nest egg. Start planning today, and discover how you can retire sooner than you think!

 

https://robertalan.gumroad.com/l/sdzvl

 

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

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Should the retired join Kiwisaver?

Should the retired join Kiwisaver?

Written by R. A. Stewart

Kiwisaver is New Zealand’s retirement scheme. It is a scheme which locks money in until the retiring age of 65. A change of rules to Kiwisaver in recent years has enabled those who have reached the retirement age of 65 and who are not already a member of Kiwisaver to join.

This leaves the question “Are there any advantages for anyone aged 65+ to join Kiwisaver?”

My answer to this question is “Yes”.

In fact there are several benefits of joining Kiwisaver after 65.

If someone is in such a financial position to be able to contribute to Kiwisaver at a later stage in life then why not? Any spare money which you have available for emergencies will help make your retirement easier as far as having an emergency fund.

If you access your bank account via the internet (Who doesn’t?) and use your phone to do your banking then having your savings in Kiwisaver will make it virtually impossible for scammers to get access to it. Kiwisaver members who have tried to access their funds which are in Kiwisaver have to jump through a few hoops to get it, including the over 65s.

At least it makes you a lot safer as the over 65s are prime targets for scammers and gold diggers.

There may not be any of the incentives such as the annual $520 government money available for the over 65s but it is still a good idea for retirees to hold on to their kiwisaver account and even contribute to it because any money which you have available acts as a financial shock and one of these is ill health which are more likely to happen to older people. Unexpected medical bills can be financially draining, therefore, having the funds can be less worrisome for the over 65s.

As a retiree you are given several options as to how you manage your kiwisaver which makes it very flexible.

You can withdraw all or some of your funds in kiwisaver.

You can opt out or opt in.

As you get older, medical bills can become a problem, therefore, any money you have behind you can make life less challenging for you.

What happens to your kiwisaver account when you pass on?

You can name any family member as beneficiaries of any money you have in kiwisaver. It will be treated just like any other asset you own as far as your estate goes and if you do not have a will then it is likely that legal fees wil;l take up a portion of your assets as the legal process will decide who gets what.

Having a will will make this part of your family’s life easier toi deal with.

About this article

THe information provided may not be applicable to your personal circumstances therefore discretion is advised. You may use this article as content for your blog or website. Check out my other articles on www.robertastewart.com

Check out the ebook “Retire with Money” only $5

https://robertalan.gumroad.com/l/sdzvl

 

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From Dreams to Dollars: How to Set Effective Money Goals

“From Dreams to Dollars: How to Set Effective Money Goals”

Written by R. A. Stewart

Having a goal for your money is a must if you want to get ahead otherwise you will just simply fritter away your money on useless stuff which does not add value to your life.

Your money fits three descriptions; they are:

Short-term money (12 months or less)

Medium-term money (1-5 years)

Long-term money (6 years+)

Short term money is money you need for the short term. This is money used for emergencies, dental  costs, and every day expenses. It is a good idea to keep a separate account for emergencies. An investment in conservative managed funds if you have easy access to the money when you need it. A separate savings account for this is suitable.

Medium-term money is money needed within 5 years. This could be savings for a car or an overseas  holiday. 

Long-term money is money needed in the long-term. This is money for your retirement or savings for a mortgage.

Where should you invest your money?

Short-term money is best invested in an ordinary savings account where your money is on call, however, an emergency fund could be invested in a conservative managed fund providing you have easy access to your money if and when you need it.

Medium-term money is best invested in a balanced managed fund.

Long-term money is best invested in growth funds.

There is no hard and fast rule as to where you should invest your money; it all depends on your risk profile and whether you have the mental fortitude to ride out the lows of the share market.

The benefits of being a saver and an investor cannot be underestimated. A saver will live within their means and wait until they have saved enough money before making a car purchase.

A spender will have nothing to show for their labours and borrows money for things they need. There is a cost to this and that is interest which means that the spender pays more for stuff they have bought with borrowed money.

Discretionary spending money is a different category of money. It is money which you are free to spend on anything you like. Some investors like to use this to increase their financial portfolio or even to try out some speculative investments such as Bitcoin and other cryptocurrency. 

People who have any kind of debt do not have any discretionary spending money until that debt is paid. Paying off debts is the responsible thing to do.

It is imperative that you manage your money with the future in mind because situations will arise when you will need a large amount of money for things which your next paycheck on its own won’t cover. Ask yourself this question, “What can I do today that my future self will thank me for?”

It is also important to continually gain financial literacy by reading books about financial management and wealth creation, but the best way to gain financial literacy is by investing in the share market. There are several share market investing platforms on the internet which enable ordinary people to drip feed money into the share market or in managed (mutual) funds. 

Don’t be afraid of making mistakes because as the saying goes, “He who never made a mistake never made anything.” Mistakes are just part of the learning process.

About this article

The opinions expressed in this article are of the writer’s own opinion and may not be applicable to your personal circumstances, therefore discretion is advised.

You may use this article as content for your blog, website, or ebook.

Read my other articles on www.robertastewart.com

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If you don’t have the money…

If you don’t have the money…

you don’t buy it!

Written by R. A. Stewart

Borrowing money to buy things is spending money you have not earned yet and there is a price to pay for that and it is called interest.

The worst type of borrowing is consumer debt. This is stuff you have bought with borrowed money. Consumer debt is purchasing things such as household appliances, motor vehicles, and the likes. Going on holiday with borrowed money is consumer debt. It is also irresponsible.  

As adults we must discipline ourselves to put off purchasing items which are pleasing to the eye but will leave us in debt if we break the budget in order to acquire whatever that may be. 

I can say that I have never owned a credit card in my life. Who needs one?

If someone cannot make ends meet on their income without a credit card then they need to take a stocktake because the interest payable on credit will compound over a period of time. All that interest which has to be paid on top of the borrowed money is money which could have been put to better use.

What seems to be at the heart of a lot of people’s financial problems is their lifestyle. I mean if you are going to get involved in a relationship then you had better make sure your income level is sufficient enough to pay for it all and the same applies to having kids and it is no good blaming politicians for this child poverty stuff if your own choices got you in a financial mess.

So you are in a spot of bother, now what?

There are three options.

1 Increase your income; easier said than done if you have other commitments but no one knows your personal circumstances better than you so there may be a way to work around this.

2 Decrease your spending; it is time to find ways to cut back by reducing your wants and minimising the amount you spend on your needs. 

3 Sell stuff that you no longer need. There are auction sites where you can sell your stuff. Make use of these.

There are some golden rules to follow when deciding whether to borrow for things like appliances and other items which may be consumer debt but are something which you need or will make your life considerably easier.

Ask yourself these questions:

1 Can you borrow the item? 

This all depends on how often you are going to use it. If you need a mountain bike to get to work  every day then you need to actually own one rather than borrow it but if it is a concrete mixer to do a one off job then borrowing is the way to go.

2 Can I purchase the item second hand?

You may not have the money to purchase something brand new but still can afford to buy it at a second hand store. This is a good option and you are still covered by the consumers guarantee act (In New Zealand)

3 Can I wait until I have saved the money for the item?

This option will definitely help you become a better money manager and also help develop the skill of prioritizing your spending.

4 Do I really need the item?

This all depends on your personal circumstances, tastes and preferences. It all boils down to whether you are prepared to sacrifice something now in order to save money.

Always keep in mind that saving something from your pay every week and keeping it in a rainy day account is a good habit to get into because it will enable you to pay cash for things which need fixing. It is also a good habit to invest some of your money for the long term such as in mutual funds. This is in addition to your government’s retirement scheme (Kiwisaver in New Zealand).

It is a bad habit to just spend everything in your pay packet every week so that by next week’s pay day you are broke.

www.robertastewart.com

 

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

 

Note: This article is of the opinion of the writer and may not be applicable to your personal circumstances. I may receive a small commission if you sign up for sharesies.

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