New Year spending hangover? A budget plan

By Retirement Commissioner Diane Maxwell

Some of us went a little crazy this Christmas Eve (actually we may have done many crazy things, but the bit I’m talking about is the spending.)

Paymark figures show we set a new record for the number of times we swiped our credit and debit cards through EFTPOS machines in stores all over New Zealand.

Across the country we clocked up more than 157 transactions per second. On a normal day it’s around 50-60 per second.

Retirement Commissioner Diane Maxwell

So did we all just wait to the last minute to do our shopping or did we spend more overall?

It seems we spent heavily throughout December, not just on Christmas Eve, clocking up $5.49 billion of sales, which is 8 per cent more than the same time last year.

The number that really got my attention was the amount we popped on our credit cards: $2.5 billion, which was nearly half of the total spent and 10 per cent more than last year.

That works if we’re using credit cards just as a payment tool and have the money to pay it off before the interest kicks in but we know that 4 out of 10 of us don’t, and then end up paying interest on the outstanding amount.

And remember credit cards can have some quite feisty interest rates, usually between 13-22 per cent.

Take a close look

At this stage you may be smiling quietly and congratulating yourself on not doing any of the above.

Many over 65s are better at managing money day-to-day than anybody.

If that’s the case, read this on behalf of some of your younger family members who aren’t, and who may benefit from your wise words.

I’m not a big fan of New Year resolutions because they often have a shorter shelf life than the Xmas ham.

But I think now is a great time to consider a few small, regular changes to the way we handle our money, which could make things better over time and prepare us for next Christmas.

First things first:

  1. Get a clear picture of where you’re heading
    1. If you can’t see it, you can’t get there.
  2. Set some goals
    1. Decide what you need in the short term, then the medium and long-term, then work on a plan
    2. Sometimes it doesn’t take much, a touch of grit and determination and a little time invested
    3. The goals can be large or small: pay off your credit card in six months, save for this Christmas, a holiday next year, or to revamp the kitchen in five years’ time.
  3. Take a look at your budget.
    1. A new year is a good time to review how much is coming in, and how much is going out
    2. Look at where your money is going and see if there are any changes you want to make
    3. Decide what you really want to hang onto - and that may be a magazine subscription, a regular coffee catch-up with a friend or a club membership - because they’re the experiences and moments that make life good
    4. But is there anything you could let go of because it’s expensive? And, as my mum would say, it ‘doesn’t achieve much’.

'Practising no'

Some of the retirees I know say they’re busier than ever since they stopped work, so give yourself one less thing to think about by setting up automatic bill payments for things like your power bill.

It’s usually free to do through your bank and saves you money by cutting out the risk of late fees.

On the subject of fees, many banks have ‘fee-free’ accounts for over 65’s. If you’re not getting that already: ask!

A final thought: start practising saying ‘no’ now and again.

Children and grandchildren can put big demands on retirees financially.

You may decide you’re ok with that and you’ve planned for it, but make it an active decision not something that just happens.

We’ve got low interest rates, and they’re going to be low for a while.

That’s great if you’ve got debt but not so good if you’re relying on your savings to provide an income.

So don’t be shy about giving a gentle reminder that retirement income doesn’t stretch as far as it did and offer them your wealth of financial experience instead.

Editor's note: Views expressed by contributors are not necessarily those of the Office for Seniors.

Stress less at Christmas by spending less
How women can plan for a financially secure retirement
Sorted.org

Sorted has great comprehensive resources for financial planning to help you prepare for retirement and for when you are retired.

Sorted’s guide to living in retirement

Sorted’s guide to retirement planning

Financial capability

The Commission for Financial Capability is an autonomous crown entity which builds financial capability to equip the retirees of today and tomorrow. We asked them to explain what financial capability is and why we should all care about it.

A quick guide to financial capability