Financial wellbeing tips for the new year

The new year is well and truly upon us, bringing with it fresh starts, new goals, and a touch of post-holiday blues. While you’re getting into the groove of a new routine, don’t forget to make a plan for your financial wellbeing too.

Easier said than done, you might think. With living costs heading for the moon, thanks to a range of factors such as rising interest rates, inflation, and the flow-on effects of global issues like COVID-19 and the Russia-Ukraine conflict, Kiwi households are well and truly feeling the pinch. But before you toss it all in the too-hard basket, remember that financial wellbeing isn’t about how much you’ve got. It’s about making the most of what you have.

Whether you’re feeling uncertain about your financial future, or just want to make sure you’re getting the best out of your money so you can have the retirement lifestyle you want, these five simple tips can help you keep on track for your goals.

Just like an annual doctor’s check-up can help you stay well by giving you important information about your health, a financial pulse check can help you keep on top of your money.

Get started by using our Financial Wellbeing Calculator to find out your Financial Wellbeing Score. Knowing your score will help you to better understand how to approach managing your money.

Once you know your score, you can do a little financial housekeeping. Rising living costs may have thrown your budget for a loop or changed your priorities – so a good starting point is to revisit (or create) your budget and plan your spending. This will give you some clarity around money coming in and going out, and might help you spot areas where you could cut back.

The financial decisions you make today can have a big impact on your future – so reviewing your KiwiSaver account is a good idea to make sure you’re still on track.

Now’s the time to check that what you’re contributing still makes sense for your goals. If you’re employed, contributions generally come directly from your after-tax pay to your KiwiSaver account. You can choose to contribute 3%, 4%, 6%, 8%, or 10% of your before-tax salary (your employer generally has to contribute at least 3% of your before-tax pay as well).

If you’d like to change your contribution rate, you can easily do this in ANZ Internet Banking and the goMoney app.

ANZ Internet Banking and goMoney can also be used to track and manage your KiwiSaver account alongside your other ANZ accounts. You can see how your KiwiSaver account is performing, view past transactions, switch funds, update your prescribed investor rate (PIR), and download annual account statements. You can make additional one-off payments by transferring money into your KiwiSaver account direct from your ANZ transaction accounts.

Your fund choice can make a big difference to your retirement savings, so it’s important to make sure you’re invested in the fund that’s right for you.

We offer a range of funds, each with different levels of risk and expected return. The key is to choose a fund that makes sense for your investment goals and timeframe, and takes into account your appetite for risk.

For example, if you’re investing for your retirement, a growth fund might make the most sense. Growth funds are higher risk, and are more likely to fluctuate in value in the short term (for example, if there’s a market downturn), but they typically deliver higher returns over the long term.

On the other hand, if you’re close to retirement, or planning to use your KiwiSaver savings to help you buy a house in the near future, a conservative fund might be a better choice. Conservative funds have a lower level of risk so they’re less likely to fluctuate in value, which gives you more certainty about how much money you have when you need to withdraw. Their value is more stable, but they also typically deliver lower returns over the long term.

Our Risk Profile Questionnaire can help you understand your tolerance for investment risk and what fund might be right for you.

If you’re invested in KiwiSaver or an investment fund, it’s important to remember that the value of your investment can go up and down, and some investments carry greater risk than others. These fluctuations are a normal part of investing.

So if you’re thinking about switching funds, it’s important to understand why. Is it because of a change in your circumstances, or is it a reaction to market events? (such as a market downturn).

When investment markets are down, your balance can go down too. But while higher risk funds can fall faster in market downturns, they can also recover faster – and even continue to grow. By switching to a lower risk fund in a downturn, you could miss out when the market recovers, effectively locking in your losses.

If your circumstances, investment goals, or risk profile have changed, switching funds can make sense. But if these things haven’t changed, and you’re investing for the long term, doing nothing is often the best option.

Price rises might feel uncomfortably high right now, but it’s important to find ways to keep saving through the good and not-so-good times. By focusing on the long term and making a plan now, you can put your money in better long-term shape.

Likewise, it’s understandable to feel that contributing to your KiwiSaver account is pointless when the balance goes down. But it’s important to keep contributing if you can – because KiwiSaver plays an important role when it comes to financial wellbeing, even when the markets are down. For example, investing through a downturn means you can benefit from any market recovery. Keeping up your KiwiSaver contributions will also help you cement the good savings habits you’ve set in place for the new year – and far beyond.