A survey of around 1000 New Zealanders over the age of 18 undertaken on behalf of the Commission for Financial Literacy and Retirement Income in May this year shows some interesting statistics about how people use their money. These surveys have been undertaken every six months since November 2011 and show fairly consistent results.
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The question of who takes responsibility for managing financial affairs and setting goals and priorities in a relationship is one that has a number of different solutions. The start of a relationship can mean a loss of financial independence that is difficult to adapt to. As a result, some couples choose to split bills in half rather than having a joint account.
What you do with your money in your twenties will have a significant impact on the rest of your life. Start off on the wrong track and it might take you years to get back on the right track. Make the right decisions with your money and your future life will be much easier. So how do you get it right?
There is really not much difference between spending and saving. All money is spent – it is just a question of when. When you receive money, you can choose to spend it now, a little bit later, or a lot later. Ultimately, money you don’t spend during your lifetime will simply be passed on to someone else to spend. Saving is therefore just deferred spending.
There has been much talk recently about whether KiwiSaver should be made compulsory and the percentage contribution increased. In theory, there could be several economic benefits from this approach. As a result, millions of dollars would be saved rather than spent and this would help take the heat out of the economy and reduce inflationary pressures.
Worries about money can cause significant levels of stress that affect your quality of life, your relationships, your health, your ability to study and your career. American research shows that money is the prime cause of arguments between couples, with over 30% of arguments being about money. Couples who argue about money are 30% more likely to divorce than those who don’t.
When money is tight, family and friends are often called upon for a loan.
It’s nice to help people but lending money on an informal basis can be a recipe for disaster.
Here are some of the problems that could arise:
Financial advisers have been working under their new regulatory framework for nearly three years and many have changed the way in which they operate over that time. In 2011 the Code of Professional Conduct for Authorised Financial Advisers, which sets clear standards for the provision of financial advice, came into force.
The Reserve Bank’s recent increase of the Official Cash Rate (OCR), albeit a small one, heralds the start of a new cycle in interest rates. The outlook for New Zealand economic growth is good, thanks to construction in Christchurch and a buoyant export sector.
Retirement planning is complicated enough for any couple, but when there is a second time relationship involved, there are even more issues to consider. In many cases, for couples coming together later in life after a previous relationship there is disparity of both assets and income.