Five Days To Sort Your Finances: Day 2 - Save Money

Tuesday, 7 January 2025, 8:06 pm
Article: RNZ

Susan Edmunds, Money Correspondent

If 2025 is the year you get your money life sorted, you may be wondering where to begin.

In this five-part series, money correspondent Susan Edmunds guides you through the basics.

Catch up on Day One - Set a Budget.

Next up: Saving money.

This one must be right up there on New Year's resolution lists.

We've just got through Christmas, when children's present wishlists tend to stretch even the most lenient of budgets, and there's the extra costs associated with Christmas parties and maybe catering for friends and family on the day.

Whether you're cringing when you look at your bank statements or just want to put aside a bit more next year, there are a few ways you could do it.

Channel your inner Marie Kondo

Sorted's personal finance spokesperson Tom Hartmann says people should think about the home organisation guru Marie Kondo if they're looking for ways to save.

Kondo talks about only holding on to things that "spark joy".

"We can do the same thing with the things we spend money on," Hartmann said. "For example with your subscriptions - there's no way you get the same level of happiness from all the things you subscribe to. For me Spotify is up the top, I'd rate that a five out of five but Netflix is lower down."

He recommends rating the things you spend your money on between one and five out of five and cutting or reducing the things that are a two or a one.

"It makes it easier to cut things back and you don't end up feeling deprived because you keep the things that really give you joy - ice creams for the kids, for me that's way up high.

"Often it's the cheap and cheerful things that end up staying in the budget."

Match your spending with saving

This requires a bit more money, but can be really effective.

The idea is that if you spot something you want to buy, you only make the purchase if you can put the same amount of money into investments or savings.

If you want some jeans for $200, you have to also put $200 into Sharesies, for example.

This slows your spending a lot but also means you have some saving happening at the same time.

Pay yourself first

Don't decide you'll wait until the end of your pay cycle and save whatever is left over. Put the money into savings as soon as it arrives in your account.

"Set up an automatic transfer to take money out of your account each payday and put it in an account that is not shown on your internet banking. Send it to an account in a different bank to keep it even more out of sight. You will be surprised at how even a small amount saved each week will quickly grow," said financial coach Liz Koh.

Emma Heaps, financial wellbeing programme manager at Westpac, said people should not be afraid to start small.

"If you've found it a challenge to put savings away regularly, start small instead of trying try to start big. Even if it's just a dollar a day for a week or a month, if you keep that up you're creating a habit that will most likely stick, and over time you can increase the amount and frequency you're putting money into saving.

"Do that for about 90 days and that habit will stick around for long time."

BNZ general manager of everyday banking Louisa Powell said people should consider a term deposit if they would not need their money immediately.

"While you'll have limited access to these funds, you could earn more interest than in a regular savings account - it's about making your money work as hard as you do. Another great tip is to choose compounding interest on your term deposit so you can earn interest on you interest.

"Consider your savings across different accounts based on your goals. Having separate accounts for different timeframes - like short-term expenses versus longer-term savings - means you can choose accounts with features that match each purpose."

Round up

Your bank might offer you the ability to round up your transactions and put the difference into savings.

You can often choose how much you want to round up, whether that's to the nearest $1, $2 or more. That might mean if you buy a coffee for $5.50, for example, the transaction is rounded to $6 and the difference saved. Even small amounts add up this way.

No spend

If you're feeling really motivated you might choose to have a "no spend" month, week or even day of the week. This means that for that period of time, you resolve to not spend anything. This could take some planning - but it's not effective if it just means you shift your spending to other times.

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