Consumer NZ unveil top personal finance tips for 2022

Sunday, 2 January 2022

Gemma Rasmussen, head of communications and campaigns at Consumer NZ said while it can be a daunting prospect to stare at a spreadsheet when you want to go to the beach, the benefits of getting your personal finance in order was well worth it.

As we start the new year, Consumer NZ has put together its top tips for personal finance in 2022.

Gemma Rasmussen, head of communications and campaigns at Consumer NZ said despite a lot of people feeling tender financially after Christmas, the new year was the perfect time to get the bank balance in shape.

“Often after a more intensive festive spending period, people wince to look at their bank account. So it can feel like a good time for people to think about what they’d like to achieve financially in the year ahead,” Rasmussen said.

While it can be a daunting prospect to stare at a spreadsheet when you want to go to the beach, the benefits were well worth it, she said.

Whether it is an Excel spreadsheet or a budgeting app, it is important to track your incoming and outgoing expenditure if you want to get your personal finances in order, Rasmussen said.

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Avoid bank fees

The first tip from Consumer NZ was to take a look at your banking setup to ensure you were not needlessly losing money through unnecessary fees.

“It can be as simple as asking about fee exemptions and haggling with your bank to see what they’re prepared to offer to keep you as a customer,” Rasmussen said.

Two key ways to avoid bank fees were to opt for a transaction account that had no base or transaction fee, and try to prioritise online banking as branch transactions sometimes came with hefty fees, she said.

Fees are important to get right as they provide a lucrative income for banks, she said.

Rasmussen pointed to the fact that in 2020 banks earned $2.3 billion from fees and commissions they charged to customers, to prove how important it was for the consumer to get fees right.

Consider switching banks

Choosing a different bank for a different purpose could be a great way to get ahead in your personal finances, Rasmussen said.

“You don’t have to use one bank for all of your financial needs. You can have one bank for your everyday account and another for a low-interest rate for a credit card,” she said.

“When looking at your personal finance set up, ask yourself, ‘is there a more attractive interest rate elsewhere? Can my bank change my account to a free-fee option?’”

Set a budget

If you want to fine-tune your finances, having a regular budget was crucial, Rasmussen said.

“Whether it was an Excel spreadsheet or a budgeting app, it is important to track your spending. Having transparency over where your money is going can help you optimise your spending and enable you to meet your financial goals,” she said.

While the new year brings with it a busy shopping season, consumers should think twice before racking up interest-free purchases, Rasmussen said.

If you wanted to lift your budgeting game even higher, it was a good idea to put spending into different categories to get the most out of it, Rasmussen said.

“There are generally three types: needs, regular expenses, and wants. Your regular expenses and wants are usually where you can make the most savings,” she said.

A Consumer NZ study conducted in October last year found 15 per cent of people had no savings, and a further 27 per cent were anxious about their level of savings, so it was important for many people to get on top of their budgeting early in the new year, Rasmussen said.

Shop smarter

While the new year brings with it a busy shopping season, consumers should think twice before racking up interest-free purchases, Rasmussen said.

“These purchases can be a debt trap, with consumers having to pay setup fees and service fees that add between five and 16 per cent to the final purchase price.”

“As well as a fee to set up the contract, most interest-free finance deals sting you with a yearly service fee. Annual fees mean the longer you take to pay off your purchase, the more you’ll pay overall,” she said.

Before signing up to a debt free purchase it was important to get out the calculator and ensure the deal was not a dud, she said.

Switching utility companies could save you hundreds

With the cost of living rising it was important for people to get the best deal on their utilities, Rasmussen said.

“You can potentially save hundreds by switching providers. Staying static with energy, insurance and mobile plans can end up costing more in the long run. There isn’t much to gain by being a loyal customer,” she said.

Data from Consumer NZ revealed household utility costs are one of the top financial concerns for New Zealanders.

To keep costs manageable, Rasmussen recommended consumers use product provider apps such as Powerswitch to find the cheapest electricity and gas plans.

Consumer NZ data showed the average household could save around $380 in energy bills if they switched their power provider.

Insurance was also high cost on households. A recent Consumer NZ survey on home and contents insurance found there was a difference of more than $2000 between the cheapest and most expensive comparable insurance policies.

Rasmussen recommended people make sure they are getting the best deal on every one of their bills.

“There are large savings to be made if you shop around. It can take a few hours to sit down and review various plans and accounts, but the beginning of the year can be a good time to ensure your finances are optimised, for a smoother financial year ahead,” Rasmussen said.