Financial Difficulty & How to Avoid this in the Future

A recent article on Radio NZ talked about the growing percentage of NZ households that are in financial difficulty. In a post-COVID market, losing employment is a potential worry for kiwi families and with many households living above their means, budgeting alone is not going to ease the burden of financial stress. If you find yourself in this situation the truth of the matter is only those who have more savings will have the ability to maneuver and manage better.

Lets put it this way If you spend most of your income on debt and have very little savings you’re not going to manage as well as someone who has more disposable income. For a long time, we have been talking with our clients about the importance of building emergency funds. Not living in debt and not living beyond their means. This is especially essential when we find ourselves facing unexpected hardships.

For the most part, if your work continues and you don’t get too far into debt, we can always kick the can down the road and use future income to cover the past debt, but once the situation changes, such as your hours going down or your job ending, it all comes to a head. If you have no debt, and you have savings, you are much more able to reduce your outgoing costs and make what you have last as long as possible before you get more work. So what to do?

This is the time to make a change, if you are out of work then your focus needs to be on gaining employment as soon as possible, but if you are in work, you need to focus on building up an emergency fund and getting rid of debt. Changing habits now means you’re not borrowing from tomorrow and better financial opportunities (and freedoms) for your future.

Over the coming months, we are going to be focusing on how to get financially sorted. The best place to start is by recording your budget now, starting with your fixed costs, and compiling a list of all your debts.