Finding Financial Freedom - Is it Nirvana or just another fairytale

Financial wellbeing leads to greater overall wellbeing. I think we all know this, but not everyone knows how to get there. Alleviating the worry of not having enough money to meet our basic living requirements makes a huge difference to our stress and anxiety levels, health and wellbeing.

I’ve had three major money moments that sent my anxiety levels soaring off the Richter scale:

• Buying my first house and not having enough money for food, let alone a fridge to put the food in
• Deciding to have a family and moving to one income, while also moving to a new city and job
• Going through a divorce, discovering we had a leaky home, and ensuring that we both ended up in as a good place as we could financially

Even reflecting on those times now I can feel my stress levels jumping up just a little. That said, I also feel very proud I was able to work through those financial challenges and still see the glass half full. Many New Zealanders, especially now, are not feeling so positive.

It’s Money Week and you may have read some stories, thoughts and insights that give you a nudge to look at your own personal circumstances.  A recent snapshot by Kantar, suggests plenty of people could do with some encouragement and help right now. The research, released in August 2022 and titled Finding Financial Freedom, gives an insight into just where New Zealanders are today. 

• Pessimism is high among consumers - 66% of those surveyed are more concerned about their financial situation now than they were 12 months ago
• 31% would not be able to pay an unexpected expense equivalent to one month’s salary
• 49% have experienced a month recently where their outgoings exceeded their income
• Only 47% are confident in their ability to fund their retirement
  One in three expect they will have to work beyond retirement age
• 42% are budgeting more or more carefully
• 33% are saving less than they did 12 months ago
• Only 24% of Kiwis have high confidence in their own financial situation

These are sobering insights and, while some of the issues have been around for a long time, I believe they also reflect how people are feeling given the state of the world today. High inflation, increasing cost of debt, global conflicts, and wages not keeping up with the cost of living especially related to food, energy and housing costs. Wrap these issues in a bow of global warming and no wonder we are feeling just a little flat.

Money Week was first established in 2012 by the Retirement Commission with the aim of improving Kiwis’ awareness and education that ultimately would improve their overall financial wellbeing. This year’s theme is “Just wondering” and its focus is encouraging Kiwis to talk more openly about money, something I think is incredibly important and something I have always done.

Over the three and half years I worked at the Commission a number of the same issues kept coming up. The usual suspects were having enough savings for our retirement years, building resistance to short term life shocks, like losing your job or a prolonged illness, and managing debt.

These three money issues have been around since Adam was a cowboy and I suspect they always will be to some degree.

What has exacerbated them over recent decades has been that we are living longer, have easy access to debt, especially high cost debt, not living within our means, and trying to keep up with the fantasy land of social media.

The first steps you could take to help the greater cause now include:

• Sitting down and doing a budget (or review the one you have)
• Building up a financial buffer and saving one month’s wages or salary, then increasing that to two months and then three if you can. Your credit card is not your safety net, by the way
• Saving regularly into KiwiSaver or other long-term investment products
• Develop a plan or a list of goals and objectives you might want to achieve. Even better get some independent advice to create that road map
• Covering your greater risks and large assets, like your home, with appropriate insurance

If you’re not sure where to start, go to Sorted where you will find not only some sage advice and information but also some great tools for those that hate Excel to work out a range of financial objectives simply and easily.

Improving your financial wellbeing doesn’t mean that you have to be rich and have the best of everything, nor do you have to be a money expert. It will mean different things to different people. There is no right answer. What I am 100% sure of is that if you feel like your financials are under control, it will lift a weight off your shoulders, and allow you more time to focus on the other important parts of your life.