You’ve decluttered your house – now get started on your finances.
How did you spend your lockdown?
While some Kiwis baked banana bread, perfected sourdough or had a go at making TikTok videos, many of us cleaned out our closets.
Op shops around the country have reported an influx of clothes and furniture, with some stores having to hire storage units to cope with the surge in donations.
Now that we’re in the next phase of recovering from COVID-19, could decluttering your finances be as therapeutic as decluttering your house?
In a word – yes.
Start with these five easy ways to tidy up your finances.
1. See the whole picture
Not knowing what’s going on with your finances can make you feel overwhelmed. Once you know the numbers, it’s easier to turn anxiety into action.
Review your investments and use online calculators like Sorted’s budgeting tool to create a new spending plan based on your current income and expenses.
2. Think slow when life is changing fast
Retirement Commission Jane Wrightson says in a Stuff interview that some households are making poor financial decisions in response to COVID-19. She also said that “High numbers had switched their KiwiSaver fund to one that was more conservative, thus locking in their losses.”
Switching to a lower-risk fund means having fewer assets such as shares, which have more potential for growth, and more assets such as cash and bonds, which usually produce lower returns over the long term.
Spend time considering when you’ll need your money and how comfortable you are with risk before making any important decisions about your investments.
3. Small changes can make a big difference
While many people struggled financially with a drop in income during lockdown, others found they saved money by having fewer opportunities for discretionary spending.
Channelling any savings into an emergency fund could give you more peace of mind, or making a lump sum contribution to a managed fund could help grow your wealth.
4. Make room for what truly matters
Now is the time to review your spending decisions and make sure you’re getting maximum bang for your buck.
An obvious hack is to check that you’re getting the government’s annual offer of free money to KiwiSaver members.
Generally speaking, you’ll get 50 cents for every dollar you pay into your KiwiSaver account by 30 June, up to a maximum of $521. If you can afford it, contribute $1,042 to get the full amount.
5. Clear space, clear mind
After your financial decluttering, stay on top of your money by regularly reviewing your budget and investments.
Getting more in control of your finances can help you feel more positive about the future as well as connecting you to the things that matter most.