How to turn bad money habits around

A few small changes might help make a big difference to your future financial position. It’s never too late to make a change for the future.

Reduce bad debt

Borrowing on your credit card is one of the easiest things to do, and a habit oh-so-hard to break. And with interest, and potentially charges from missed payments, it’s an expensive habit too.

If your credit card debt is a few thousand dollars, make a plan to pay it off. Small steps you can achieve are better than having too much enthusiasm with your repayments, then borrowing it back again later.

If your credit card debt is well up there in the tens of thousands of dollars, and you have other debt such as personal or car loans, get some budgeting advice, or see a financial adviser.

Start an emergency fund

The coronavirus impact on the NZ economy might have been a wake-up call for your job security. How long could you survive if your hours were cut? Or you lost your job? Once you’re in an okay spot with paying debt off, slowly get some money banked for an emergency. Aim to have up to three months’ worth of expenses. But start small. Even having $500 spare in times of crisis is a great start!

Contribute to KiwiSaver

Even if your balance has dropped lately, keep contributing at least 3% to your KiwiSaver account. This will make sure you get any employer contributions, plus the government money of up to $521 every year. This money’s invested, so it will probably grow faster than a savings account over the long term, but remember, it can only be used for a first-home deposit, or retirement when you reach 65.

Address your issues

Money isn’t really a great thing to talk about with friends on a night out, and if you’re struggling, it’s even worse. I used to joke about how bad my finances were, but in reality, this was just a cover-up and I was extremely stressed about it.

Make a plan to take control of your spending – this includes tracking what you buy and starting a budget, and not spending everything you earn. Sorted has some great tools to help here.

Record what you spend

Many of us have no idea where our money goes. Keep a ‘spending diary’ for a couple of pay cycles. Print off your bank statements and work out how much you’re spending on essentials, food, transport, clothes, and treats. From there you can decide what to cut.

Ask for help

There is no shame in asking for help, and usually, you’ll wonder why you didn’t do it sooner. There are plenty of amazing resources out there, and great people more than happy to help you. 

It's never too late to improve your spending habits and your personal money situation!

Learning to live within your means, and slowly getting some savings behind you can be so empowering.

Helpful resources 

  • Money Talks. If you’re in a pickle, free budgeting advice might be helpful.
  • Sorted. The government’s website for all things personal finance.

Published 18 March 2020

Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. It does not constitute financial advice. We recommend you speak with an independent financial adviser.