We’ve spoken about this before – the relationship between financial wellbeing and mental wellbeing is crazy strong, and we have seen this in our clients (and in our own lives). Financial wellbeing, money, and property in New Zealand is a huge component and factor in people’s mental health, especially as the latter is one of the key ways to build wealth in this country.
So let’s break down what we’re seeing at the moment.
A high cost of living
We know it’s spoken about all the way through the media as every single person is feeling the pinch at the till, no matter if it’s the pump, the supermarket, or even heading to your local hardware store to do some Kiwi DIY. We have seen plenty of New Zealander’s feel uncertain about their economic future, with levels of confidence as low as they were post Global Financial Crisis in 2008. On top of this, the buying power is moving to the younger generations, who are feeling like they will never hit their financial targets with so much of their money going towards the basic essentials.
Ultimately, financial wellbeing and health is a huge and layered blend of circumstances, attitudes around money, behaviours, and life stage.
Getting caught up in financial FOMO
Financial FOMO is one of the key aspects we see of overspending – keeping up with your friends, trying something your family is doing, or pushing out a macho bravado. We see it a lot through social media, with people able to go on big ticket trips, and in response, our peers are throwing caution to the wind, racking up debt on the all too available credit cards.
It’s important to recognise social media for what it is, and that your friends and family members will live entirely different lives to you – from debt, to income, to living expenses. Stay within your means and feel secure in saying ‘no’ to things that will be unhelpful to your future self. Keep thinking bigger than the immediate gratification or satisfaction.
CCCFA isn’t slowing down the market
What we’ve seen the most is that the CCCFA hasn’t actually slowed down the market, and it’s a great example of a good idea executed poorly. Go to a good broker (not a lazy one) to get you where you need to be, because if you’re under the ‘safe’ 20% deposit mark, you will be looked at under a microscope. Even with the current reforms for the CCCFA, happening in around June 2022, these aren’t going to slow things down too much. We have also seen a crazy increase in home valuations of up to 30%, so even if the market ‘drops’ 5%, you’re still up 25%.
Be wary of what is out there in the media – it makes for good headlines and clickbait to have shocking or surprising events. What’s out there doesn’t always represent what is actually happening.
What to do to stay financially ahead
There is a direct correlation between people’s happiness and having enough disposable income at the end of your pay cycle. From the latest survey completed in December 2021, Kiwi’s do take saving seriously (which is fantastic), with 56% of us squirrelling money away for an emergency.
There are so many tips to stay ahead financially, and all of them are to do what is usually considered a boring thing, like setting a budget or cutting back on your spending. Realistically these are what needs to be done – with a budget comes freedom, not restriction, when done correctly. You don’t have to swipe your card at the til and hope for the best if you already know that you can afford it. Give yourself some room in your budget for a coffee out, a dinner with friends, or a drink with your mate.
The link between financial wellbeing, money, and property
It’s no secret that in New Zealand, if you’re on the property ladder, a lot of wealth can be built and socio-economic circumstances can be changed – which is why here at Money Empire, we want people to get into property! Not only is it tangible, it’s an asset that only goes up in value over time. Money comes and goes, and often you end up losing money with savings sitting in the bank due to inflation, but property is a key component to wealth building. Alongside wealth building, is wealth protection, which is a saucy way of saying insurance.
Home loan rates might be going up (although as of March 2022 they’re still not as high as the rates pre-COVID), but ultimately your home is an asset. Mortgages and home loans are what most people are stressed about, as these payments underpin a lot of what you have worked hard to achieve. The pay off is (literally) huge!
We’re also seeing a shift in people’s mindsets from the quarter acre section and the white picket fence to high-density housing. This makes buying a home still an achievable dream, as terraced homes are much more affordable (and a new home is way easier from a compliance and maintenance perspective).
At Money Empire, we pride ourselves on being culture first and everything else second as a result of knowing the pressures that an unbalanced life can bring. If you’re feeling the pinch of the rising cost of living, feeling like you’ll never quite hit your goals, or generally feeling a bit down about it, know that we’re here to help. Get in touch with us today and we can get the ball rolling.