Over 3 million people are KiwiSaver members here in Aotearoa New Zealand, so it’s definitely something you might want to learn more about and consider joining sooner rather than later – as you’ll see, there are definite upsides to getting started with a KiwiSaver scheme provider.

How does it work?

When you are a KiwiSaver member a percentage of your wages/salary is automatically deducted from your pay each week, which is then invested in the share market on your behalf.

Which might sound like a bit of a drag – you might have better ideas as to what you could do with that income. But hold off on any judgements yet. The best part about KiwiSaver is that it’s not just you putting money aside for your future each week.

If you’re a New Zealand citizen and working for salary or wages (even if it’s a part-time job), it starts with you deciding how much of your pay to put aside into a KiwiSaver account. It can be between 3% and 10%.

Your employer is then required to also pitch in a minimum contribution of 3% into your KiwiSaver account (if you’re 18 years old and over) – this is in addition to your regular salary/wages. This is called ’employer contributions.’

And then the government also puts money aside for you – as long as you put a minimum of $1,042 per year into your account ($20/week), then the government will pay you $521 each year. This is called the ‘government contribution.’

Free money, what’s not to love about that?!

Do I have to join?

Nope, signing up to KiwiSaver is totally your choice. But we reckon it’s a really smart choice to make for yourself and the security of your future happiness. We’ll explain why as you read on.

Once you join, you can’t opt-out. But we know you won’t regret it. (And if your personal circumstances change where it’s no longer viable for you to keep making your KiwiSaver contributions, then there are ways to put your contributions on hold).

Reason 1 – buying your first home

After three years of being a KiwiSaver member you are eligible to withdraw your KiwiSaver balance and use it towards your first home.

Getting a deposit together for your first home is hard, especially when we’re young and there are lots of more immediate tempting things to spend our hard-earned cash on.

KiwiSaver is like a savings plan that keeps you honest – the money is taken out of your pay before you receive it so you’re never tempted to spend it, and because it goes into a fund you can’t access, it’s a little bit like ‘out of sight out of mind’ – other than the gratification of checking your growing balance of course!

Reason 2 – you’ve turned 65

The main purpose of KiwiSaver is that you have a lump sum of money to have a decent quality of life when you retire. This money is generally used for things like rent, food, fun and travel.

If you retire before the age of 65 you still have to wait until you turn 65 before you can access your KiwiSaver funds.

The main thing to remember is that KiwiSaver is your long-term savings scheme – it’s there in the background, ticking away and growing in the share market without you really having to think about it.

Ok, I’m on board – how do I join KiwiSaver?

There are three options to get started:

1.     Automatic enrolment. When you start a new job, you may be automatically enrolled by your employer if you’re between the age of 18-65 years, in a full-time or permanent role, or on a contract for 28 days or more.

2.     Ask your employer. If you’re under 18 years, you won’t be automatically enrolled but you can ask your employer to opt-in. You’ll likely need one of your legal guardians (like a parent) to co-sign your account application form.

3.     Through a KiwiSaver provider. You can do this whenever you like and means you will have complete control over which provider you use based on things like returns and investment strategies.

For a full list of KiwiSaver providers you can visit ird.govt.nz/kiwisaver.

How to choose a KiwiSaver fund

Not only do you get to decide which KiwiSaver provider you will use, but you also have the choice of five different types of funds you want your money invested in.

Which fund you choose comes down to what we call ‘your appetite for risk.’ Are you comfortable seeing your money go up and down and back up again? Or would you prefer to see a steady but slower increase over time?

You might not know which is best for you yet, and that’s ok. You can join us at the Life101 Launchpad to get more direction with your decision-making when it comes to which provider and fund best suits you and your goals, as well as an epic #truthbomb when it comes to the big difference between taking action now or holding off.

We also recommend Inland Revenue’s KiwiSaver guide for young people (click here), and for additional help making your decision about whether to join or not, you can also visit www.sorted.org.nz – it’s the Commission for Financial Capability’s website and provides free, independent information about money matters, including KiwiSaver.

We’re here to help you get a head start on setting yourself up for property ownership and retirement with a breakdown of the ins and outs of joining KiwiSaver, get in touch here with any pātai, or join us over at Launchpad here.

The post Everything you need to know about KiwiSaver for kids and young people appeared first on Life101 Launchpad.

Starting to track your finances and creating a monthly budget can help you feel like you’re on top of things, know where you’re spending money, and have your sights set on a bright future.

Why create a budget?

It can show you what you’ve got to work with and how to get through tough times.

It’ll help you understand your relationship to money and spending habits, keep a healthy credit score and work towards your savings goals or debt repayment.

It’ll show you what’s important to you and how to get there.

Best of all, it doesn’t require calculus or algebra, phew! No fancy equipment is needed – you could even go real old skool and write it up with pencil and paper.

What is a budget?

A budget is a way of telling your money where to go, rather than wondering where it went.

It isn’t about restricting what you spend. Instead, it’s a plan for how you want to spend your money, and can be a great tool to get you back on track if you’re struggling to stretch out your, pocket money, student allowance or weekly pay.

A budget is like a simple maths equation: X – Y = Z

There are some great budget templates out there you can use. Click here to see a completed (example) budget, and click on one of the following formats to download a black budget template in Microsoft Word, Google Docs or as a PDF. Fill in the budget template with your income and expenses and see how your money plan is looking.

Getting started – planning a budget

1.     Add it all up – how much monthly income do you actually have to work with? Add up all the money coming in over the course of a month – this could be from your pocket money, a student allowance, wages or welfare benefits. It could also come from a side hustle, or any interest you have coming in from existing savings.

You may get some of your income as a bulk one-off payment for the year, so you’ll need to divide that amount by 12 months. You might also get payments like wages weekly, so you’ll need to work out the monthly amount ($X x 52wks / 12mths).

2.     Then look at where your money is currently going – yes, that might mean some ‘forensic accounting’ looking at your past transactions on your bank statements. It’s the money you’re spending to buy stuff – make a list, or highlight your expenses on your last bank statement (and don’t forgot to include any expenses you pay cash for!).

It’ll make budgeting easier by helping you understand what regular expenses you have and how your money is being spent across different ‘needs and wants’.

3.     Group your expenses into categories that make sense to you, for example, all your lunches, snacks, supermarket shops etc will be categorised under ‘food’. It’ll give you a picture of how much of your expenses is going towards essential fixed expenses (like rent), how much is going towards essential variable expenses (like transport to study or work) and how much is going to discretionary expenses (stuff that’s not necessary for day to day living, like socialising).

4.     Create a budget – the goal is to spend less than you earn so take a good look to see where you can cut some of your spending back. If you do have some money left over, consider putting it into a separate savings account or set up a bank account to create an emergency fund. Generally an emergency fund, or money set aside for miscellaneous/unexpected expenses, is ~10% of your total weekly expenses.

5.     Monitor your budget – this is what the ‘actuals’ and ‘difference +/’ column in our budget template are for. Write what you actually spent that week or month in the actuals column and then in the difference column write whether you were under or over your budgeted amount.

And remember, if you’ve been spending a certain amount on something, it doesn’t mean you have to keep spending that. Always try to reduce your expenses. If you’re struggling to get by, try some of the tips below.

First pro tip – pay yourself first!

Once you have a completed budget you’ll know how much you’ll need to set aside for your essential expenses (rent, utilities, food etc), and you’ll also know how much you have for savings. When you get paid, pay yourself first! Transfer that savings amount into your jam jar savings account before you’re tempted to spend it.

Choose a formula for all of your expenses and saving money

It can be helpful to pick a method or formula for how you split your net income and ultimately save money. We love the jam jars approach (mentioned above) with separate bank accounts which you can learn about here.

Another method is the 50:30:20 rule – where 50% of your budget goes towards ‘needs’ and essential living costs like rent and groceries, and expenses you can’t easily skip like transport to work or study or course materials; 30% goes towards ‘wants’ or nice-to-haves like socialising, memberships and subscriptions, and buying clothes; and 20% goes into savings. The key is to make it easy and realistic.

Putting your budget to work – track spending regularly 

Pick a regular date to go through your budget. The start or end of the month is a good idea to do this, but you may want to build a new habit of regularly checking more often if your finances are fluctuating quite a bit, or if you’re still figuring out where your money is going.

You probably won’t get the balance right first time when it comes to your financial goals. If you overspend, look at ways to cut down your spending in your ‘wants’/discretionary costs, or maybe you need to lessen your savings expectations if it all feels a bit tight and hard to achieve.

Experiment and play around with it

We often try to lessen the time to reach our savings goal by increasing our monthly savings amount (and reducing our spending) but this might be a cause of stress and low daily satisfaction.

It can sometimes take time to find out the right balance between spending money and saving for you, which often comes through experimentation in your budget planning. It’s up to you to decide how much to set aside each month.

Some banks have a money tracking tool you can use to monitor your budget, and you could try a budgeting app like Booster, MoneyLover and PocketSmith too.

Bonus tip!

If you have a jam jar for a savings goal, or 20% of your income going into a savings account, AND you have a debt repayment or two – does that make good financial sense?

Learn more about debt and why you should address your debt repayment/s before you start saving here.

Keep on keeping on

The key thing to remember is that your personal budget doesn’t have to be perfect on the first go. Like anything, it gets easier with practice.

Money goals give you a sense of direction and encourage you to keep going, and really, that’s what budgets are all about.

Want to know more?

Sign up for the Life101 Launchpad here or learn more about the Better Budgeting workshop (and other financial workshops) here and prepare yourself to take on the world! Creating a budget and learning about saving are some of our most successful courses to date, with lots of practical ways to get you on the right track with budgeting, and therefore, your future happiness.

The post 5 easy steps to better budgeting—for students! appeared first on Life101 Launchpad.

Ever heard of the top-selling book 7 Habits of Highly Effective People?

Well, this is like kinda that, but to save money… which is to say – building savings habits today for the joy and delight of your future self. With one less step – win win!

So, you’ve left home or you’re about to receive your first pay-check, and now what?

Do you spend up large, consuming pay-check to pay-check?

Living off the vibe of a ‘she’ll be right’ attitude but in reality that often means more debt?

Having a savings plan

Unless you are counting on long lost Great Aunty Dorris bequeathing you riches, or you’ve got a stash of treasure buried in the garden, you’re going to need to start thinking about the life you’re setting up for yourself through the decisions and actions you take today.

This means both managing debt and having a savings plan. (Don’t believe us? Get your dose of reali-tea here by entering an interactive simulation).

It all sounds very sezzy doesn’t it? Well, think of it like this – the best way to learn how to save money is to start doing it.

Start saving money early with our jam jars approach to creating a monthly budget – this will give you lots of time to get things right, and make a few mistakes along the way.

How to start saving money:

1)    There’s no point trying to figure out how to save money if you have credit card debt, hire purchase interest costs, or other debt interest gobbling your income. So first on your step towards saving is to clear your debts.

Not sure how? Make it one of your short term goals and learn about our Debt Dilemma workshop here.

2)    Keep track of everyday expenses (and reduce them where you can) – this will make a big difference to understanding your relationship to money and saving.

Check out our ‘budget planning for students’ blog to get to know your spending habits and priorities a little better.

3)    Make a personal budget – and stick to it! Feel free to download a budget template you can use here.

Don’t have a regular income yet? It’s important to get a grasp on budgeting so you can take advantage of this skill set when you’re earning the big bucks.

4)    Be clear on your savings goals – make them realistic, you don’t want to put yourself off by being overly ambitious. If you make your savings goals too hard, you’re less likely to stick to it.

Little and long is the key to developing the money habits and getting the treats!

5)    Calculate the savings you’ll need per paycheck to reach your goal. Watch Phil’s video here to see how he saved money for the car he wanted.

6)    Pay yourself first – the most important saving habit of them all! Make your saving automatic by putting money straight into your savings account (like a direct deposit) before you do anything else with your paycheck. You’re less likely to notice (spend) it, and you’re not at the mercy of being reeeaallly good with your everyday expenses.

Paying your future self is where it’s at. Bonus points for setting up jam jars for your weekly income – see below.

Going on your dream holiday or buying that mean car – putting your savings plan into action

Jam jars is one method of organising how you save money and how you spend money. Each time you get paid, transfer your money into four (or however many you want to have) different jars (bank accounts). For example:

Expenses

This jar contains money for all your day-to-day living expenses (fixed and variable expenses from your budget) like grocery shopping, rent, power bills, petrol/public transport costs, car insurance, gym memberships, streaming services etc.

Fun

Having fun is a valid goal, even when you’re trying to save hard. This jar contains money for the fun stuff (discretionary expenses from your budget) like going out to dinner or to the movies, clothes shopping, impulse buys etc.

Savings

This jar contains money that is going towards your savings goal. Bonus tip – if you know what you want, like the car or holiday for example, give the bank account that title to get you inspired to save. From your budget you should know how much you have leftover to put towards savings.

Investing

This jar contains money that you want to invest. From your budget you should know how much you have leftover to put towards investing. If you’re not yet at the stage of thinking about investments, you could set up an emergency fund for those unexpected expenses like the dentist or car repairs.

All you need to do is set up each bank account within your online banking, and give them the jam jar names.* Set up automatic transfers for each amount so your money flows where you want it to go. Financial freedom, here you come!

*No jam need be consumed in the making of your mint life.

To go through these 6 steps to be debt free and save more money with help and tips from us, sign up to get started on your Launchpad journey today.

Any savings pātai? Get in touch with us here.

The post How jam jars can save money and get you a trip of a lifetime appeared first on Life101 Launchpad.