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Highlights
- Recent reports indicate Kiwi households are battling with an increased cost of living as compared to previous years.
- Many have taken multiple high-interest loans to cope with the situation.
- The article covers interesting tips suggesting better management of money by Kiwis amid rising costs.
Stats NZ has revealed that the cost of living among Kiwi households was up by 5.2% in the quarter ended December 2021 in comparison to the costs a year earlier. In fact, this rise has been the highest since 2008 and is being witnessed by the majority of household groups.
A rapid increase in petrol prices, rising interest and mortgage costs in comparison to slow growth of wage rates, are some of the major issues which a common NZer is dealing with.
Having said that, let us look at the five ways through which Kiwis can cope with the escalated costs while giving a boost to their earnings at the same time.
Do Read: 8 investing tips by Warren Buffett you can follow in 2022
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- A thorough review of existing expenditure
Wise money management involves re-evaluating one’s spending and taking control over expenses. Only then, one is able to analyse essential and not-so-essential expenditure and cut down on the costs accordingly.
Making a budget is recommended as it gives a snapshot of one’s monthly income and expenses and helps in drawing out plans for savings for the future.
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- Look for cheaper alternatives
One can beat inflation by looking for inexpensive alternatives and becoming creative in his/her purchases. People can include less expensive clothing brands, food and grocery stores, beauty products, etc., in their shopping list.
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This would not make much difference in quality or taste but will definitely make a significant impact on one’s cash reserves.
- Slashing unnecessary expenses
If rising costs are creating huge pressure on one's budget, striking off unnecessary expenses plays a major role in dealing with a cash crunch.
One can easily forego an expensive gym membership or appointment at a high-end beauty salon; instead, one can work out in an apartment gym or avail services from a neighbourhood salon.
Moreover, carpooling and skipping the second glass of wine when partying with friends goes a long way in helping save money.
- Managing high-interest loans
Sometimes, people do have multiple high-interest debts. In such situations, combining them into one debt with lowered interest charges is a wiser move as it makes it more affordable to pay loans during market downturns.
Financial firms such as Good Shepherd, Ngā Tāngata, etc., offer cheap or no-interest loans to eligible Kiwi applicants.
Further, if one is struggling to pay current debts, it is advisable to negotiate and revise terms of credit with the lender than refusing to pay at all, as the latter situation adversely impacts one’s credit rating.
- Consider free alternatives
Limiting one’s expenditure does not imply missing out on fun and enjoyment with family and friends. One can take advantage of free concerts and free admissions to museums.
Moreover, many companies, while launching new products or services, offer discounts and freebies, which can be availed.
Bottom Line
A prudent and balanced approach towards managing one's income and doing away with unwanted expenses greatly helps in dealing with inflationary pressures.
