It’s clear having the ability to save even a small amount can make a big difference. This was seen in the higher levels of wellbeing experienced by people who had savings of $NZ1,000 or more (aside from their KiwiSaver retirement funds).
Every little bit really does help. The more you can save, the greater your feeling of being in control.
Over time you will also reap the benefits of compound interest. Even small amounts will benefit from ‘compound interest’ over time. That is because you start to earn interest on the interest you have already saved. With compounding, a smaller amount saved earlier can end up earning more than a larger amount you saved later.
We all lead busy lives. We know it’s important to have a budget, and get on top of our finances. But it can be tempting to put those decisions off until another day.
Practice makes perfect
“Managing money is a skill," Chief Executive Officer of the Financial Services Council Richard Klipin says. "It takes focus, practice and hard work. Money is a scarce commodity, so how we manage our relationship with money will determine how we weather the storms that turn up in our lives and communities.”
It is complex, but Klipin says there are some key rules:
- Make sure you save 10 per cent to 15 per cent of your pay packet and put it somewhere safe to grow;
- manage and understand risk in your life;
- it is not how much you earn – it is what you do with it; and
- discipline, hard work and patience are the keys to long term financial wellbeing.
Money Week is being organised by the Commission for Financial Capability, and more than 220 organisations will be involved. These include government agencies, banks, schools and community groups.
It is not the only initiative underway to help people get on top of their finances.
Recently ANZ staff attended the Financial Industry Inclusion Forum, a gathering of government, business organisations and community groups.
Attendees included New Zealand Bankers’ Association, The Financial Services Federation, Good Shepherd New Zealand, The Banking Ombudsman, The National Building Financial Capability Trust, The Commission for Financial Capability, The Ministry for Social Development and The Ministry for Business, Innovation and Employment.
They looked at everything from how to create emergency savings, to providing community ride-sharing for people who cannot afford a car, but who need a vehicle to get to their job or place of study.
ANZ was among the banks committed to improving access to simpler, safer financing for vulnerable people.
One of the initiatives discussed was microfinancing. It was recognised there is a need to find a more co-ordinated approach. This would include scaling up the current offerings, and finding ways to bridge gaps in the existing offerings.
A report is due back with the government by October, outlining the progress of the initiatives.
ANZ is excited by the work the Forum is undertaking, and by events like Money Week. There is an old saying that money can’t buy you happiness. But it can certainly impact your sense of wellbeing.
So although it can be challenging to understand your finances, it is worth it. It gives you a sense of control and it gives you choices - choices which hopefully will lead to happiness.
Ana-Marie Lockyer is General Manager, Wealth Products at ANZ