New Year’s resolutions often focus on diet, exercise, and lifestyle changes.
But after a tough 2024, we would expect a lot of people are thinking about their own finances and avoiding or reducing financial stress for 2025 and the years ahead.
It’s not a bad idea to look at your finances and see what changes you can make.
If you’re compiling your ideas for your own New Year’s resolutions, then let’s have a look at some of the items that you may want to put on the list.
Your Mortgage (the big one!)
Obviously, your mortgage is a big one.
Making sure that you have a good interest rate tends to be the main focus for many but moving forward, you need to make sure you have the best home loan that offers you the flexibility to deal with those hard years, which unfortunately we know will come again one day. You want the ability to pay the loans off faster and therefore be more prepared.
The difference in interest rates is often minimal between what would be the best home loan on one day and the next best. A slightly lower interest rate is not something that you’re going to be hailing from the rooftops about if you cannot have the flexibility within your home loan. Flexibility is key, and unfortunately a lot of the home loans out there don’t offer you much in that area.
Your First Home (for anyone saving and wanting to buy)
If you do not yet have a home loan and are still saving for your first home, then it might be a really good year to make some good progress on that one.
House prices have been at lower price levels, which makes it more affordable to enter the market.
KiwiSaver returns have been doing exceptionally well in most cases, if you’re in the right plan.
Plus interest rates have come down from what they were, with good prospects of reducing further.
Even if you don’t have this deposit that you’re expecting, or you may want to progress things with repaying debt or tidying up accounts a little bit more, it’s still worth talking to an advisor, getting your financial position assessed professionally now, and knowing exactly what you need to do to get yourself into a good buying position.
House prices are not expected to stay low forever, but they are expected to stay high. Therefore, the sooner you do this, the better position you’re going to be in to take advantage of those lower house prices.
KiwiSaver (is this your major retirement plan?)
We touched on KiwiSaver and how people are doing their investing, and it’s something that everybody should review.
Like mortgages, there are a lot of differences in how KiwiSaver funds operate and the returns that they could provide for you.
Remember also that KiwiSaver should be one part of your savings and investment strategy, with having an emergency fund being essential, and having a non-locked-in investment rather than just KiwiSaver.
We will be releasing a new review tool in January, and so we will welcome you to run yourself through this and see how your existing savings and investment strategy is working compared to what might be recommended. This is a free tool, and if you’re interested, we will make sure that you’re reminded as soon as that is available.
Budgeting (something we don’t like, but…)
Budgeting is one thing that most of us hate, and yet doing a budget can often open your eyes to what you are spending and where you have wasteful spending.
The way that we suggest you do a budget is not just writing down what you intend to spend or intend to earn and spend; it’s reviewing the last three months as well of what you have actually earned and spent, as this is the most valuable information.
There are some good tools available for budgeting, from the simple spreadsheet-type options, such as the Budget Planner, to Budget Buddy, which is a really easy-to-use app. There are a number of other tools that you can use to help you with your budgeting.
While you may not like budgets, it’s worth doing the exercise and seeing what changes you can make, as you may be very surprised with the results, and therefore be able to implement some changes pretty quickly.
In Summary:
Those are the key four areas that we would suggest you look at or have on your New Year’s resolutions list.
There are also a number of other things that you can review and should review in the New Year, as a matter of course. You can often get some good savings when you review your insurances, whether that be your house and contents, your car insurance, or your life insurance or health insurance.
Also, if you review your utility expenses, such as your electricity, your internet provider, and mobile provider, often, by making a switch to some of these, you can get significant savings.
Finally, if you have any debts, you need to have a review of those and make sure that they are as efficient as they can be. We’re always amazed to see the cost of finance that some people have when it’s not necessarily needed.
Some personal loans are exceptionally expensive, as is tax debt and credit cards. If you have any debt outside of your mortgage, you should have a look at the options because you may be able to do it a lot more efficiently and save money.
We can definitely have a look at that with you and give you some advice.
