Leading financial advisor, Sheryl Sutherland, shares her tips for beating financial stress - including how to slash bills and take control of your cards.
Most of us will have felt it at some point during these past few troubling weeks. That tight squeeze around your heart when a money worry ambushes you. We’ve had plenty of time to think since lockdown, and for a lot of Kiwis that will have meant hours stressing over personal finances. Which is understandable. These are uncertain times with news of redundancies, salary cuts and economic downturns clogging the headlines.
Sheryl Sutherland, a leading New Zealand financial advisor has noticed an uptick in concerned calls and emails from customers – but her response is a reassuring one. While these are unusual and worrying times, it is not all doom and gloom financially.
The author of Girls Just Want to Have Fund$, Money, Money, Money, Ain’t it Funny and co-author of Smart Money , shared some of her top tips on how to reduce financial stress and protect your money during the coronavirus pandemic.
LEAVE KIWISAVER ALONE
When it comes to your KiwiSaver nestegg, Sheryl’s advice is simple. Don’t touch it.
“I’ve noticed a lot of New Zealanders talking about changing their KiwiSaver plan to a conservative one or pressing pause on it completely. These decisions are often emotional. When there is uncertainty in the air, people want the reassurance of having the money in their hands.
“However, now is not the time to panic. The markets are actually up 20 percent – something you probably haven’t seen the more sensationalist media outlets reporting on! Even though there was an initial dip, if you check your KiwiSaver now, it is likely back to or almost at the level it was before lockdown. Now is not the time to make changes. In fact – if you are able to – it is actually a good time to put more money in.”
MAKE A BUDGET
We all know that we should stick to a budget but the reality is that it often slips to the bottom of the to-do pile. While we have a little more time on our hands, it is worth pulling one together. You will discover holes in the leaky money bucket that you didn’t even realise you had.
Sheryl recommends keeping a money diary for a while so you can get a clear grasp on everything you’re spending. A bit like a healthy eating diary.
“If you haven’t drawn up a budget before, you’ll be spending money that you’re not even aware of. A surprising amount of dollars disappear down black holes like that daily takeaway coffee. Get a diary and write down everything you’re spending. That’ll help you identify exactly where your money is going so you can create an accurate budget that will genuinely help you cut costs.”
Once you know where your money is going, Sheryl suggests going through and checking loans, credit card and utility bills and recurring subscriptions to see if there is a way to cut spending. If you don’t need it or can reduce it – give it the chop.
BE DISCIPLINED WITH CARDS
When you’re using ATM and credit cards, it can feel like you’re not spending real money. Sheryl advises setting a limit each day.
“In the old days, we would have suggested carrying cash and only spending what’s in your pocket. When you’re done, you’re done. But that’s not really practical now – not least because a lot of stores are reluctant to take cash due to coronavirus. Instead, put a limit on the amount you can spend each day on your card and stick to it. It will make a huge difference.”
GETTING BEHIND ON YOUR PAYMENTS?
It’s one of our worst fears – getting behind on mortgage, rent and loan payments. Things spiralling out of control. It can be tempting to stick your head in the sand and hope it will go away, but that’s the worst thing you can do.
“If you’re behind or think you might struggle to make payments in the not too distant future, tell your provider,” says Sheryl. “They are often more understanding than you might think and can actually offer you possible solutions. For example, your bank might suggest a mortgage holiday. A lot of people balk at the idea but you have to be flexible if your income is under pressure. If you can put off a fixed cost to get you through the next few months, it is well worth considering.”
Sheryl also advises getting rid of as much high-interest debt as you can, such as credit cards and loans, which can reach a staggering 25%+ interest. Switch to a lower interest card, if you can or consider transferring the balance to your mortgage, if you have one. You will pay much, much less.
ASK FOR HELP
We’re fortunate to have a number of budget advisory services in New Zealand, including MoneyTalks, which provides advice and support from trained financial mentors. MoneyTalks can also connect you with services in your community.
Monday to Friday 8am to 8pm.
Saturday 10am to 2pm.
Freephone: 0800 345 123
The Sorted website is also a fantastic resource, providing the tools and information you need to tackle debt, plan and budget, save and invest, dial up your KiwiSaver, plan for retirement, protect what's important, and manage a mortgage.