Tag Archives | spending and saving

Choosing When to Spend

Choosing When to Spend

There is nothing wrong with spending money. In fact money has no value unless it is spent. As they say, you can’t take it with you, so if you don’t spend your money during your lifetime, then someone else (the beneficiaries of your estate) will get the pleasure of spending it. During your working life and retirement, money will come to you on a regular basis unless something bad happens, such as the loss of your job, a business failure, or a severe health problem. How you fare in life financially will be determined by the timeframe in which you choose to spend the money you receive. As you receive money, you can choose whether to spend it now or later. If you choose to spend some later, you can choose how much later you wish to spend it.

Choosing to spend money later is called saving. Unfortunately, the word ‘saving’ has become associated with depriving yourself of enjoyment of life. The way to view saving is that in fact it increases your enjoyment of life – but in the future rather than now. There are three types of saving. Firstly, there is the saving you need to do to cover unexpected expenses and loss of income. Next, there is saving for big, one-off planned expenses such as holidays, a new car or home maintenance. These expenses occur in the medium term (the next five years or so). Then there is the saving you need to do for the long term, including retirement.

The art of managing your financial affairs prudently is to be able to correctly apportion your income into these different categories; money to be spent now, money for unexpected expenses and events, money for spending in the medium term, and money for spending in the long term.

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How Do You Compare?

CompareHow Do You Compare?

A survey of around 1000 New Zealanders over the age of 18 undertaken on behalf of the Commission for Financial Literacy and Retirement Income in May this year shows some interesting statistics about how people use their money. These surveys have been undertaken every six months since November 2011 and show fairly consistent results.

Spending and Debt

Only fifty six percent of people spend less than they earn. We are still great users of credit, with twenty one percent of people having a retail purchase agreement. However, we are reasonably responsible with debt given that ninety five percent of those who repaid their purchase agreements in the last year did so within the interest free period. Of those with credit cards, fifty eight percent pay them off each month.


More than two thirds of people say they have access to three months of income as an emergency fund, and seventy one percent of people have put money into savings within the last three months. However, the focus is on short term savings, with only twenty nine percent saving for long term goals. Only fifty one percent of people contributed to KiwiSaver in the last three months.


KiwiSaver is the most popular form of investment, with fifty three percent of people surveyed being members. Around two thirds of people have other investments, with thirty one percent having bank term deposits, eighteen percent having managed funds, eighteen percent investing in property, twenty percent investing in shares, sixteen percent investing in their own business, and eighteen percent investing in some other way.

These statistics are useful to compare your own financial behaviour with the rest of the population, however there is considerable room for improvement for everybody when it comes to saving, especially long term saving and membership of KiwiSaver.

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