Budgeting Basics
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Getting started
Know your spending habits. Add up all your income and expenses to see how much you realistically need each week for different things, where you are over-spending and can cut back. One wicked website that’ll do this for you is www.sorted.org.nz. Even if you want to do the maths yourself, have a look at the site – they list expenses you might not think to include. Set up an account for bills. Once you have worked out how much money you need to put aside to cover all your bills (including rent, power, water, phone and internet), set up a bills account at your bank. You can organise for your bank to automatically put an amount of money you choose into this bills account every time you get paid. That way, you don’t have to remember to transfer the money every payday yourself, and you know that your bills will always be taken care of. For this account, don’t get an EFTPOS card, since you can set up an automatic payment, where the money gets transferred out automatically. Set up an account for unexpected costs. The real stress of money comes from those extra surprise costs, like car repairs, A & E bills, medicines, computer and phone repairs or clothing items for a job interview or one-off occasion. Having a separate account for these expenses too can be really helpful. To make sure there is money in this account, think about where you can cut back from. For example, how much do you put aside for buying your lunch or buying takeaways? Can you instead make your lunches and cook dinners more often and instead, put this money away each pay. How much money do you put aside for the movies? Can you instead watch more d.v.d’s? Hire purchase and finance companies Don’t buy into the pressure – literally.More than ever, we’re under pressure to have the “right” stuff. Finance companies take advantage of this pressure and offer to “help” by lending you as much money as you want, when you want it. This may seem like a sweet deal, but as they say, if it sounds too good to be true, it probably is! Know what you’re really getting into.Finance companies and hire purchase deals make money by having high interest rates. That means that you they charge you a certain percentage of how much money you borrowed or your purchase price on top of your borrowing. So for example, an interest rate of 25% per annum (year) when you borrowed $1000 would be $250 per year on top of that $1000 until it’s paid back. Minimum payments will hardly cover the interest, meaning you’ll be paying off your purchase for years and pay stacks more than the ticket price. Separate “want” from “need”.Do you really need it, or do you just want it without having to wait? Think carefully before committing to years of debt. The constant and expensive repayments could stop you from doing fun things, saving and buying other stuff you actually do need in the future. What are the alternatives?At the very least, go to your bank and try to get a bank loan first. Banks often have deals for financially strapped students needing cash for stuff like a bond when moving into a new flat at short notice. If the bank does turn you down, it might be because they think you’ll struggle with the payments – so consider saving for something if you don’t need it right away. Even saving half and borrowing half is a better alternative. Interest-free deals.Some companies will also offer interest free periods, normally between one and three years. If you are able to pay off your item within this interest free period, then these deals are also worth looking at. A word of warning – be sure you know the interest rate in case you haven’t paid off the total by the end of the interest-free period. You also need to check the fine print and ask some questions – some ‘deals’ leave you getting charged interest right back to the purchase date at the end of the interest free period. |
We’ve all gone to the supermarket for a few things, only to get to the till and somehow it’s added up to $40 at the checkout...
Here are some tips to help you save a bit of money when it comes to food shopping.
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Ins and Outs of Insurance
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Owning a car or buying things like stereos, laptops, cameras etc is a big investment. For a lot of people it is important that these assets are protected from damage and/or theft and so it is always a good idea to look into insurance plans, so that if something happens, you might be able to get some of your money back or your gear replaced.
There are several types of insurance. Many young people mostly think about contents and car insurance. Contents insurance This covers household contents and personal belongings. When you live in a flat with people you don’t know so well security can get a bit lax… windows left open or unlocked… maybe unfamiliar people visiting? You may not have considered getting insurance for your gear – but it’s a decision that could save you thousands. Insurance doesn’t just protect you from thieves. It can also cover unpredictable events like a fire, earthquake or flood. Some companies won’t insure individual rooms in flats, so shop around. The amount you’ll have to pay each year for a policy depends on where you live, your age, the number of people in your flat and how much of your gear you want included in the policy, but expect to pay at least $180 a year. Don’t worry if you can’t pay the full amount up front – most companies have an instalment option. If you’re under 21 and living in a hall of residence, your may be eligible for limited cover under your parent’s contents insurance. Get your parents to check their policy before you go organising one for yourself. Tips:
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Car insurance
Having your own car is awesome, but the expenses like car repairs, warrants, regos and car accidents are not awesome. Unfortunately if you are 25 years and under, car insurance can be expensive, but you’ll probably be really grateful you invested in it after that little “ding” in a carpark. There are different insurance types that entitle you to different levels of coverage and at the very least you should get third party insurance which will cover the damage to another vehicle should you be found to be in the wrong. Some factors that will determine how much you will end up paying for insurance are:
Where to find out about insurance options? Your personal bank will most likely provide insurance options and there are a number of insurance companies out there. You can have a talk to others about the insurance providers they are with and how much it costs. Make sure you shop around. If you are unsure of any aspect of what you’re signing up for – just ask, anyone and everyone – it’s better to be fully informed before committing to a policy and avoid possible disappointments when you actually need to use your insurance. Terms Premium This is the amount you pay each year to have your gear insured. Premiums can be paid annually, or by weekly, fortnightly or monthly installments. Discount You can sometimes claim a discount for equipment that reduces the risk of damage or loss, such as burglar alarms. Other discounts may be available for people over a certain age and for having other policies (such as health and car insurance) with the same company. Most companies also reward you for being claim-free (no-claims discount). Excess This is the initial amount that you agree to pay for a claim, and the company will pay out for everything over and above that amount (up to the policy limit). For example, if you have an excess of $300, you will pay the first $300 worth of any damage and the company will pay the rest. Replacement Policy The insurance company will replace a lost or destroyed item with a new one or repair the item so it is ‘as new’. However, items over a certain age may not be replaced, and there is often an upper limit on what you can claim. This is specified in the insurance policy as the ‘sum insured’. Indemnity Policy The insurance company will pay an amount based on the item’s age and condition immediately before it was stolen or damaged. It is usually equivalent to the amount you would pay for the item second-hand. |
Government AssistanceWork and Income New Zealand
There is a range of income support available for young people whether you are working, studying, looking for work or under 18 and living independently from your family. The best place to find out more are the Work and Income and Studylink websites. They have heaps more information and call centre folks or staff at your local WINZ are there to help. Benefit entitlements vary depending on your circumstances, such as your age, where you live, if you have a partner or children and whether or not you work or study. For most benefits you have to be 18 or over and have lived in NZ continuously for two years or more, although there are some exceptions to this. Youth Payment Youth Payment is a weekly payment which helps young people between 16 and 18 who cannot be financially supported by their parent or guardian or anyone else due to family breakdown. Youthline Auckland is a provider of the Youth Services so if you live in the Auckland region, click here to find out more. If you live outside of Auckland, click here to find your local provider. Youth Parent Payment Young Parent Payment is a weekly payment which helps young parents aged between 16 and 18 years old. Youthline Auckland is a provider of the Youth Services so if you live in the Auckland region, click here to find out more. If you live outside of Auckland, click here to find your local provider. Jobseeker Support Payment Jobseeker Support Payment (which has replaced the ‘unemployment benefit’ and the ‘sickness benefit’) provides a weekly payment to people looking for work or people who want to work full time but can’t due to a health condition, injury, mental health issue or disability. Supported Living Payment Supported Living Payment (which replaced the ‘invalids benefit’) is assistance for people who have, or are caring for someone with a health condition, injury or disability. Sole Parent Support Payment Sole Parent Support Payment helps single parents and caregivers of dependent kids prepare for part-time work while providing financial help through a weekly payment. |
Extra Help
There are also extra supplements available. You may qualify for some of these even if you are not on a benefit but may be on a low income. Accommodation Supplement Accommodation Supplement is a weekly payment which helps people with their rent, board or mortgage. Disability allowance Disability allowance can help you pay for ongoing medical costs related to a disability, including counselling costs. The application for this allowance must be supported by your doctor. Community Services Card The Community Services Card can help you with the costs of health care and some health services, like doctors and prescription fees. Transition to Work Grant Transition to Work Grant helps people with the costs of moving into a job, including clothes for an interview, living expenses before your first pay and job search costs. Temporary Additional Support Temporary additional support is a weekly payment when can’t meet your essential living costs from what they earn or from other sources. This can include food, emergency dental or medical payments, or essential items like a washing machine or fridge. Tips for applying for financial help
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