Starting to get ahead financially

However it makes much more sense to start without having to wait until a shocking life event.  To start, you just need to take the first step.

So the very first step is for you to decide you want to change your financial life.  This involves acknowledging that you will take full responsibility for your financial future.  This also means throwing aside your previous life experiences with regards to money.  So it no longer matters that you don’t have To get ahead financially your head needs to be in the right space.  If it’s not then you may need to make a seismic shift to change your attitude to one of believing that you can have the financially sustainable life you want.  Only you can do this. 

The good thing is that it’s never too late to start. 

Sometimes you need some catalyst – usually something terrible that happens that shakes you into taking action.  That may be a divorce or health scare.  You may have read or heard about Sir Michael Hill and the house fire that catapulted him into taking some action on his financial future in his 40’s!  From there he went on to build a global empire selling jewellery.

Don’t be put off by thinking you haven’t had enough education or that your parents were poor.  You can create the financial life you want.

If you have a partner, you will need to include them in your decision. Otherwise your best efforts at moving forward may be in vain.

Consider your Money Language.  Changing this is so quick and easy to do and will give you some quick wins.

Once you’ve decided that you want to take charge and have taken that first step then the rest can become easier. 

Now write down your financial goal(s). Keep this achievable (but at a stretch) and measurable, and make sure you put a timeframe on it.  This will give you something to work towards.  This may be to buy a house, go on a working holiday, or retire early.

Now write down what you are going to do today to start on that journey towards your goal.  This first step might be that you will work out a savings plan or limits to spending, that you’ll start on a course to improve your qualifications to increase your income, or to start investing small amounts through an online platform such as Sharesies or Hatch. 

If you are a parent or grandparent you may decide to set up a children’s account to provide for your child/ grandchild’s tertiary education.

A good first place to start is to work out where your money goes.  To do this set up a spreadsheet with the following columns:

  • Food ( for example, groceries)
  • Eating out, including work lunches
  • Other entertainment (for example, movies)
  • Rent or mortgage
  • Health ( for example, doctor’s visits, dentists, medication, gym)
  • Insurances
  • Utilities (for example, rates, phone, power, gas)
  • Appearance (for example, clothes and hair)
  • Holidays
  • Transport ( for example, bus, train, petrol, car maintenance)
  • Tobacco
  • Alcohol
  • Gambling (including Lotto tickets) and fines
  • Incidentals (for example, magazines, gifts, etc).

Then in the top row for each category estimate the amount you spend in each area in a typical month.  Some will be easy to estimate such as your rent.  Don’t look anything up such as prior phone and power bills – this process is about understanding how much you spend on these items.  For annual amounts such as insurance, estimate the total and divide it by 12 to get the monthly cost.

Then download your last month’s banking transactions from internet banking via a .csv file and copy your actual items of spending across these columns.  Don’t pick December or January as they’re not typical months. Total each column and compare it with your estimate in the top row of each column.  This will help identify areas where you are spending more than you think you are. 

These are the first areas that you can start cutting costs.  Nothing is off limits.  For example you might decide to move someone cheaper to save rent, or to go housesitting or move back with parents, to change your phone plan or have your hair cut 8-weekly rather than 6- weekly. In many cases reducing costs will be relatively painless and after a couple of months you will have changed your spending habits.

Chloe & Daniel

Chloe and Daniel were tired of paying rent but couldn’t see how they could ever get the deposit together to buy their own home.  They had tried sticking to a strict budget but for them it was worse than being on a diet or trying to go to the gym.  They would start off well but just couldn’t seem to stick to it. They also watched house prices rising on an almost daily basis. But one day, after friends had just bought their own place, they decided that they were going to pull out all stops to achieve their goal.

They went through the exercise above of working out what their spending was going on, set about ruthlessly reviewing and reducing where possible (they found they could save a bundle on insurance and power by changing providers) and then agreed the amounts they were going to keep for discretionary spending.

They set up two new bank accounts (one for bills such as rent, power, phone, petrol, insurance and food), and one for savings ($100 each per week), leaving their main account for other spending.

They then put in place automatic payments to allocate funds from their main account to the other accounts each payday. They increased their KiwiSaver contributions to 10%.  They agreed that as soon as their student loans were paid off they’d put 80% of the additional income into their savings account.

Chloe and Daniel have estimated that they should have a good deposit within 2 years given that they already have some money in KiwiSaver and that they have agreed that any pay increase or other unexpected income should be allocated to the savings account.  They have decided that 2 years of only eating out occasionally and only cheap holidays will be worth the sacrifice.

Several months down the track they can see that they will make their goal and have started looking at houses they might be able to afford.

Money language

You are probably not aware of the language you use around money but the thoughts and words you use will have a significant impact on your attitude to money and financial matters, and those around you.

So, for example, if your money conversations or thoughts are always along the lines of:

“We can’t afford that”

“I wish we could buy a new …” move someone else”,

“It’s OK for the Jones’s – they’ve got heaps of money”,

“We don’t earn enough”

“Money doesn’t grow on trees”

“When the grandparents die we’ll inherit some money”

“If interest rates increase, we’ll be out on the street”

“Banks are robbers”

“Business owners rip off their customers and don’t pay their fair share of taxes”

Etc etc,

Then that is what you will subconsciously believe. You will find financial matters stressful, that interest is bad, bankers are bad, and that money is hard to get. This may be the language that you grew up with or that you hear in your workplace or amongst your friends or colleagues or even from your partner.  Your children will grow up thinking and believing what they hear from you every day.

Indeed, research from Massey University [1] has shown that the single biggest influence on your financial behaviour is your parents. Conversations you had at home while growing up greatly influence your confidence around financial matters. You may, for example, be wary of the sharemarket because you’ve heard your parents talking about how much they lost in the crash of ’87, through Finance Companies or the GFC (Global Financial Crisis) between  2007 and 2009, or the COVID-19 Coronavirus in 2020.

But you will need to change your thinking first. Some of this will be subconscious but all you can change is on the conscious level. Consciously changing your thoughts will impact your subconscious thinking.  Some people find using affirmations or printing out post notes and putting them in places that you will see help reinforce positive thoughts.

Then by simply changing our language, we can completely change our perspective on money and financial matters.

For example, notice the change in attitude and emphasis from the following phrases:

“What can we do to be able to afford that?”

“How can we afford to buy x?”

“The Jones’s are fortunate in that they don’t have to think as carefully about money”

“We earn enough/ plenty for everything we need”

“We should pay some more principal off our mortgage now in case interest rates rise in the future”

“Let’s use your bonus to buy a small treat and then pay off a chunk of the mortgage”

“We should bank with a NZ owned bank so we know the profits remain in NZ”

“It’s difficult for people who own their own businesses to take holidays when they want”.

The latter conversations are not as negative and put the onus of taking responsibility on sorting out financial decisions back to us, the decision maker, not blaming someone else.

Remember your children absorb so much from their parents, often subconsciously.  And parents role model behavior for their children. Our children are listening to our every word, even though it may take them several years to work out what they mean.  So in much the same way that children learn to speak from hearing others speak, so too they learn about financial matters.

And that is why the words we use, and our tone when using them, reinforce our own thinking and teach our children about money.

But if we and they are constantly exposed to negative words and connotations around money then that’s what we’ll think and they’ll learn and it will take some effort to change that ingrained thinking.


Petra grew up in a household where money was never talked about although the children seemed to understand what the family could afford and what they couldn’t.  Things became worse when her parents divorced. Large items such as a new bike were reserved for birthdays or Christmas.  So when she got her first job at an investment company after leaving school she spent the whole of her first pay check.  Afterwards she felt worried sick but she quickly learned to be more careful.

Meanwhile everyone she worked with seemed quite extravagant with their money.  Sure they earned more than her but their language was of financial abundance.  She took their advice on savings and investments and soon found herself very comfortable and confident around money.

So always speak in an abundant and positive, but modest, way about money.  And it won’t cost you anything!

[1]  Matthews C, Reyers M, Stangl J, Wood P. Insights from 2012–2032 Longitudinal Study: Stage two. Westpac Massey Fin-Ed Centre. URL:

What is a financially sustainable life?

What do we mean by “a financially sustainable life”?

For me it’s about being financially independent: having enough income and assets to live the life you want.  It means not being dependent on anyone else: not on a partner to provide you with an income (even if you’re a full time caregiver), not on a job (jobs are never permanent), not on the government, not on family or others.  It’s about being in charge of your own financial destiny.  It’s about being master of your time.

If you are young, KiwiSaver may provide enough for a simple but adequate life in retirement but if you want more, like the ability to retire early or have more money in retirement, you may need to do something else as well.

To be sustainable you need an asset base to provide you with income throughout your lifetime.  This asset base may be a property that provides you with rental income, it may be a business that provides you with profits, or shares or other investments which provide you with dividend and interest income.

Being in this position doesn’t happen overnight but it will happen over time, and that length of time will depend entirely on the amount of effort you are prepared to put in.

You’ve probably read stories of people who are millionaires at 22, usually through a start-up or through property.  Start-ups are not for everyone but if you have a good idea and are prepared to back yourself then go for it! 

You can make money on property by buying a rental property that has potential (either using equity in your own home) or staying at home (or renting cheaply) and using your savings as a deposit.  You may have to do the property up, including tidying the section and some planting/ landscaping.  You can do up a rental property relatively cheaply – the trick is to contain the costs (ie don’t go overboard) and do it quickly.  You will save money if you can do as much of the work as you can yourself.  But remember “time is money” and every day it’s not rented or sold is costing you interest. 

Get it rented as quickly as possible for a market rent, have the property revalued, and use the increased equity to purchase another property.  Keep going and soon you’ll have a number of properties and an income stream.  For the first few years the rental income will only be covering the costs but this will improve over time as rents increase.  For those that have made huge profits early on it is likely they have being buying up properties, doing them up quickly and selling them, then using the profits to buy more property.

Or you could steadily build an investment portfolio, following your shares closely and investing in areas that you understand.  For example if you’re a chemist then you may realise that a new product will take off as you can see a high use for it. Some shares can increase by a significant amount over a short period, providing the shareholder with large profits.  These can then be invested in little known companies, giving the opportunity to make huge gains (or huge losses). If you don’t have specialist knowledge, like most of us, then spread your investments across a range of shares and some will do well while others may not.  The longer you are in the sharemarket though, general inflation should ensure that your portfolio increases in value.  This is the principle of KiwiSaver.

Running your own business is another option but not for the faint hearted.  It requires the ability to take responsibility for all aspects of a business, the human resources, health and safety, operational and financial. But this is a good way to earn a reasonable income and to build a business that may have some sale value in the future.

If this all sounds quite daunting and you love your job then absolutely stick with it – just remember to set aside money each payday for investments so that you can choose when you retire.

And when you retire, you can also start to use some of your capital as “income” or a source of retirement funds.  For example if you have $250,000 excluding your home on retirement at age 65, then that gives you $10,000 or around $200 per week of capital to add to your pension for the expected 25 years until you turn 90. And that’s before considering any income or capital gains you’ll receive on those funds during the 25 years.  Realistically you’ll have around $300 per week tax free to spend, in addition to your pension.

Other than the costs of rest home care (and many people fund this from the sale of their property or a unit they buy in a retirement village) older people don’t spend a lot!

Remember though that as you deplete your capital base you are also eroding your income from that capital base. So if you want to have a more even weekly income level then you can dip slowly into your capital at the beginning, leaving your capital to earn even more income.

Hopefully but that stage you will have built a financially sustainable life so you are able to enjoy your retirement and live it on your terms.