Clive Fernandes
Auckland, January 9, 2021
KiwiWealth’s State of the Nation Investor Survey
It is the start of the year again.
As 2020 drew to a close, some of us would have been glad to see the back of it. Others may have taken the Christmas and New Year period to relax, enjoy the company of friends, and just have fun.
Many people will take it upon themselves to improve in some way. And the ‘New Year’s Resolution’ has been a popular Western practice to help with this.
If you have not made one yet, or are just up for a challenge, let me give you one for 2021. Why don’t you make 2021 the year where you give yourself some financial peace of mind?
Challenge yourself to be financially secure
Financial security has been a problem for many Kiwis.
In early 2020 (before the pandemic), a Finder Survey found that one in three New Zealanders were living paycheque to paycheque. And according to this research, 15% of Kiwis could live off their savings for less than a week.
Covid-19 has also taken a hit on our financial security. In June 2020, KiwiWealth’s State of the Nation Investor Survey said that a third of Kiwis felt less wealthy because of Covid-19.
This Survey also suggests that mid-income earners, homeowners, investors, Aucklanders and anyone that isn’t NZ European was more likely to have been financially impacted by Covid-19.
In June 2020, some of us may have believed that share market prices would fall further and house prices would plummet. Now that we are in 2021, it has become apparent that some groups like investors and homeowners have fared better than what we have originally thought.
But while the consequences of Covid-19 were different to what we originally anticipated, the impacts of Covid-19 will still stay with us for some time to come.
Unexpected financial events
Many Kiwis experienced financial hardship during the Covid-19 lockdowns, exposing their already fragile financial situation. As a result, many of us should take this pandemic as a reminder that we must prepare for the next unexpected event.
A global pandemic is an unlikely occurrence. But, what if your car broke down? What if you had an emergency medical bill to pay? And what about your retirement savings?
Research has shown that problems are caused by not being financially prepared.
During the last two weeks of level Lockdown Level Four, the Commission for Financial Capability (CFFC) conducted a Survey. They found that 34% of New Zealand households reported being in financial difficulty, and 40% of households were at risk of tipping into financial hardship.
Half of those in financial difficulty had borrowed to buy food or other essentials during the four weeks of Lockdown level Four, and 17% of this group were in rent or mortgage arrears. This would have likely caused large levels of financial stress for those affected.
According to other research from the Commission, financial stress can negatively impact mental wellbeing and create relationship problems.
Make 2021 Year of financial security
The benefits of being financially prepared are clear. So make a plan to improve your money situation for 2021.
The best way to do this is by creating an action plan, ideally with a financial advisor. This way, you can outline some specific steps to follow so you can become financially secure.
It may seem like a difficult task to sort out your money situation. But by taking small steps, you can create big changes in your life. By putting the effort in today to become more money savvy, you can reap the rewards in the future.
2021 only comes around once. But the benefits from being financially secure last for a lifetime.
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