Use this Budget to review your own situation, take action, and make changes.
It’s been called the Mother-in-law of all Budgets. It’s true that the latest government Budget contained a bitter pill for Kiwi battlers.
That pill might be the medicine we need. All but the very best of savers aren’t going far enough to ensure their long term financial future.
We’ve had a lot of wake-up calls in the past few years. The global financial crisis was one, followed by the collapse of the finance companies, the recession and its impact on families, the Christchurch earthquakes are an on-going reminder, and the Budget sealed it.
These wake-up calls are a reminder that we need to change our ways. In all fairness, we have changed a bit. Our appetite for consumer debt has fallen and we’re now saving, rather than spending more than we earn.
Most of us can go a lot further, such as:
Save more than the minimum. I’m sure most RaboDirect customers are saving at least 10% of their income, thus tithing for their retirement. Even so, almost all of us could save more than we currently do. Even li’l ol’ tightwad me could up that monthly figure destined for savings.
Embrace Kiwisaver. I’m no cheerleader for the government. But those of us who have been contributing to Kiwisaver since Day One have built up sizeable portfolios already. More than half of my money has come from the government, so I’m not complaining. I’m sure I’ll get the usual rash of complaints about these comments from the conspiracy theorists that “don’t trust the government”. Personally it’s great to have a chunk of money invested in a very different manner to the rest of my retirement portfolio. Kiwisaver is a great, painless way to diversify that comes with free money from the government.
Don’t overcapitalise your own home. I’m a great believer in not putting too much capital into the home I live in. Admittedly I’ve got a nice villa. By no means, however, is it all the house I could afford. Friends are up to their necks in mortgage to pay for their grand homes and massive extensions. Personally I’d rather direct that money towards my long term savings. Again, you only need to look at Christchurch to realise that homes aren’t always assets, although earthquakes aren’t something you can plan for.
Plan, budget and set goals. The Budget made it clear, as I blogged last week, that the welfare state is going to be a whole lot less generous in the future. Not that it’s generous now for the vast majority of people that rely on it. That’s all the more reason to ensure that your financial future is planned, you budget, and that you set goals. Goals make achievement so much easier.
Finally, don’t let this Budget be committed to the history folder in your mind. Use it to review your own situation, take action, and make changes.