Survived through 2025? Here’s your money fix for 2026, from experts who’ve been there, done that

Sunday, 11 January 2026

Each year brings 12 months in which people can improve their money lives.

Many Kiwis’ money lives are a struggle despite New Zealand being ranked by the World Bank as a “high income” country, and many yearn to use the 12 months of 2026 to put their money lives on a firmer footing.

So bad are many adults’ finances that going into Christmas, 459,000 people were behind on their payments of at least one of their bills, or loans, and 20,900 home loan accounts were in arrears at the end of November.

An improving economy, and lower mortgage rates, should mean an improvement in household finances, but many Kiwi households are taking active steps to improve things, including the many people the banks say are overpaying their home loans to get ahead.

“I hope this year’s going to be a bit better than the last two years,” says respected money author Martin Hawes. “The last two years have not been good for a lot of people.”

Last year saw New Zealand flip from being a country in which more than half of people felt they were getting ahead financially, to one where the majority either felt they were just treading water, or actually sinking.

While a better economy would be a relief, to really start prospering, people need to take active steps, says Tom Hartmann, personal finance lead at Sorted, the Retirement Commission Te Ara Ahunga Ora’s money website.

“The income side is only one part of it. It’s really what you do with that money, and how you manage, it that’s really going to make a difference,” Hartmann says.

Each year brings 12 months in which people can improve their money lives, and Hartmann says for many the starting point is building an emergency fund.

Your 12-month plan for…..

…. getting an emergency fund

Finance experts suggest people should aim to be able to cover three to six months of living expenses just in case they lose their job, and struggle to find a new one.

Tom Hartmann is managing editor of Sorted.

But that’s a mammoth task, and financial adviser Tracy Hemingway (aka The Debt Free Diva) suggests people start off aiming to get to $1000 in what she calls their “Oh shit fund”.

“Start with a thousand bucks because that covers a vet bill, a car broken down, all life’s little challenges,” says Hemingway, who provides advice to people seeking to get out of debt as well as being a mortgage adviser, principally to young first home buyers.

Hartmann says: “Having this financial cushion ensures that you are prepared for life's uncertainties and can handle them without undue stress.”

Kiwibank research suggests one in three adults wouldn’t have the cash to manage an unexpected $500 bill without having to borrow for it.

One strategy is setting a realistic target that can be achieved in a year, and setting up automatic payments from salary into a separate bank account.

Automation is key for Hartmann. It enables people to lock in a savings habit.

To be classified as a high income country by the World Bank, a country had to have a gross per capita national income of US$13,935 in December 2024, roughly NZ$24,200.

“You can set things up and forget them and then all of a sudden realise you’re in a different place.”

Hartmann says Sorted has a savings goal calculator people can use to work out how much they need to save to get to their goal each week, or fortnight.

Those with a target of ending the year with a $1000 emergency savings fund need to save $19.25 each week.

Both he and Hemingway are cautious about people using artificial intelligence systems like ChatGPT to run their personal finances.

Calendaring a mid-year review may also be a good idea, though Hemingway recommends monthly check-ins.

Martin Hawes, well-known finance writer and columnist.

Hartmann says once you hit your goal, keep saving, directing money to pay off debt, or invest.

…. for KiwiSaver

Few people can claim to have written more wisely about KiwiSaver than Hawes, who has written 24 personal finance books including the classic Twenty Good Summers.

KiwiSaver, for Hawes, is a long-term “set, but not forget” scheme.

KiwiSavers get advice, or use online tools, to choose the right kind of fund for them (cash, conservative, balanced, growth, etc), and how much they should be saving, and then let time, and the markets, amass them a retirement nest egg.

The oldies are still the best. Martin Hawes is Kiwi royalty among money writers.

While that may sound easy, people need to work out what they think they need to amass in KiwiSaver by the time they reach the age at which they retire, and then work out how much they need to be contributing using one of the many online calculators.

However, not all of a person’s wealth-amassing will be through KiwiSaver. Property, direct investing, crypto, term deposits, inheritances, and business will all feature in many lives.

And, not everyone’s KiwiSaver near-term strategies are aimed at the same goals.

Younger savers may be trying to amass a house deposit, while over 65s may be carrying on working to top-up their nest eggs.

Hawes rates the Sorted KiwiSaver tools as excellent, however, they aren’t much help in choosing which KiwiSaver scheme to be in. The big banks have the largest KiwiSaver schemes, but are not the best performers.

But Hawes says getting the right type of fund, and the right contribution rate, are the more important factors for long-term KiwiSaver success.

Everyone should keep an eye on their KiwiSaver progress, and Hawes suggests people emulate the otherwise wild Count Alexei Vronsky from Tolstoy’s Anna Karenina and have periodic “days of reckoning” on their finances to check on how they are progressing towards their goals.

Hawes suggests once every three months.

There is also a firm date to put in the KiwiSaver diary: June 30. That’s the date by which people who want to qualify for the whole $260.72 government subsidy need to have contributed at least $1042.86.

… the mortgage

“We get really really busy over the Christmas period, and just after Christmas,” says Christopher Mackenzie, a mortgage reduction expert from NZHL in Hamilton, who works with clients who are aiming to pay off their home loans quickly.

The Sorted mortgage calculator allows people to see how much they could save themselves in interest and years of debt-slavery by increasing their home loan repayments.

“They have that New Year’s resolution. They want to get themselves sorted. They pick up the phone. They start looking for advice,” he says. “They want to make a change.”

This year is particularly hopeful for people with home loans as mortgage rates have eased, which should leave many with more cash in their pockets, some of which they could use to pay down their debts more quickly.

“Even $20-a-week – we’re talking coffee money – can have a big impact,” Mackenzie says.

Knocking years off the home loan by cutting spending on other things, and making larger repayments, saves a huge amount on interest, but a budget needs to be sustainable, Mackenzie says.

Tracy Hemingway, who became a financial adviser after navigating her way out of over $90,000 of personal debt. She styles herself the 'Debtfree Diva'.

“If you can find a place that works and is not over restrictive, it still allows you to live, and at the same time get ahead. It may not happen as fast as it would with a crash diet, but over time it works better and longer because it’s more sustainable,” he says.

Someone paying $100-a-month more than the minimum repayments off a 30-year term, $600,000 home loan at a long-term average interest rate of 6% would pay the loan off in December 2053 instead of January 2056, and save nearly $60,000 in interest.

If that person paid $200-a-month more than the minimum repayments, they’d have cleared the loan by February 2052, and save over $100,000 in interest. Bump that up to $500-a-month, and they’d be mortgage-free in early 2048.

There are free online tools, including from Sorted, to help people model their own mortgage repayment strategies to work out how many years, and how much interest they could save themselves.

Hawes says getting rid of mortgage debt on the family home is the best risk-free “investment” people can make, and it has the added benefit of de-risking family finances.

…to get rid of high interest debt

Hemingway learned to be good at money through necessity. She is living proof that there can be a prosperous life at the other end of a deep, dark debt tunnel.

Many years ago, she worked her way out of over $90,000 of debt, including some from a failed business.

She worked like a devil and turned over every cent she could to clearing her debts, a path to home ownership and property investing.

January is as good a time as any to set the goal of getting shot of consumer debt, but that can’t be done without first getting complete clarity on how much you owe.

There are many tools to working out a debt repayment plan for the coming 12 months, including the Sorted debt calculator, which works on the “avalanche” model of paying off the highest-interest debt most quickly.

One last point money experts make is that spending less does not have to mean a worse life, but it might mean having to find new, cheaper, or free, ways to find joy.

At the height of her debt repayment journey, Hemingway recalls: “I found a salsa dance class at a local community club that was only $30 a year. I went to a Zumba class once a week. That was $5 a week.”

Hartmann recalled the frisbee golf phenomenon that hit Wellington a few years back.

“I was like, “Wow, look at that. Somebody’s taking the time to set up these courses and they’re free and people are having a great time.”