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Having the money for what you want in life

Having the money for what you want in life is about knowing where you’re headed, and taking the right path to get there – one step at a time.

4 minute read

Life can get busy, and taking the time to think about your goals and how much money you need to reach them can sometimes seem overwhelming. But having a clear future direction and a plan for how to get there can help you achieve it. 

Focusing on the future means you’re less likely to end up spending more than you should now, and are probably better prepared if something unexpected pops up down the track. Here’s how to get started.

Start with the end game in mind

Start by thinking about what matters to you – everyone’s different, so make sure your goals are linked to what you want to achieve in life. Even if you haven’t written them down, you probably have a few ideas floating around in your head, like:

• planning your wedding
• buying your first home
• heading off on your dream holiday
• helping your kids onto the property ladder, or with their education
• or cruising through retirement

Or maybe you just want to have more financial freedom and to be able to do what you want, when you want to, without the added stress of money.

Whether your goals are just around the corner, or more of a long-term thing, it’s a good idea to work out how much money you’ll actually need to achieve them. Include all the things you want to save for, but be realistic about what you can afford.

Know your numbers

Do your research so you know approximately how much you’ll need to put aside for each goal. Next, divide this number by the amount of time you want to take to reach your goal – weeks, months, or years. That way you’ll know how much to aim for, and how much you need to set aside on a regular basis.

For example, if you want to save for a $1,500 holiday and you’ll need to pay for it in nine months’ time, your equation might look like this:

Holiday savings: $1,500/9 (months) = $167 a month.

It could be a good idea to open a separate account – say, a savings account you call ‘Holiday’ – and set up an automatic payment for this amount that goes in as soon as you get paid. That way, you might not even miss it.

Once you’ve got an idea of how much you need to save, it might be time to start thinking about cutting down on costs, and getting control of your day-to-day finances so you’ve got a better chance of reaching your goals.

Things you can do now

Make a budget – know how much money you have coming in, and how much you should have going out, to ensure you have enough left over to meet your goals. Cut down your spending where you can, and try to stop using credit to pay for things you really can’t afford.

Start an emergency fund – this will help you to stay out of debt if any unexpected costs come up. Set up a separate account and have an automatic payment go into it each pay day. 

Reduce your debt – when deciding whether to save or pay off debt, it might be a good idea to repay any high-interest debt, or your smallest balance first. Consider a debt consolidation loan and motivate yourself by thinking about a debt-free future.

Get some extra support – a financial mentor may also be able to help. One option is MoneyTalks – an independent and confidential service which is completely free. The financial mentors can help you with confidential advice, and talk you through your options for getting on top of debts and covering the essentials. Not-for-profit organisation Good Shepherd NZ can also provide low-and-no-interest loans to assist with life’s essentials, including debt solution loans, as part of their DEBTsolve programme.

 Look further ahead

Prioritise your needs over wants. Make sure you’re covered with insurance, for example, in case anything out of the ordinary happens before you start saving for ‘nice-to-haves’. Start focusing on the bigger things that might take longer to save for, like renovating your kitchen.

Don’t forget to play the long game

Think about the lifestyle you want to lead well into the future. You could start planning for your retirement by joining a KiwiSaver scheme – even if you still have debt to pay off. Make sure you’re making the most of your KiwiSaver by regularly looking at how much you’re putting into it, as well as checking the fund type you’re in is the best one for your current situation.

Don't forget to review your medium-to-long-term goals every year to see where you’re at and if there are any changes you need to make. Whatever you’re aiming for, it’s important to take action. That way you’ve got a better chance of reaching your goals, no matter what they are.  

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This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article.

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BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the Issuer and Manager of the BNZ KiwiSaver Scheme. Download a copy of the BNZ KiwiSaver Scheme Product Disclosure Statement PDF 1.1MB, or pick up a copy from a BNZ branch.

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