There’s a growing concern amongst economists that Kiwis are financially ill-prepared for the worst. And, as a country with one of the lowest spends on insurance, it’s not hard to see why. We share some of the steps you can take starting today to better position yourself for tough times ahead.

Prepare for the worst

Research undertaken by the Commission for Financial Capability has uncovered some alarming facts: only half of Kiwis interviewed say they could count on insurance to cover damage to their home or car, while just 15 per cent said they had income protection insurance.

Kicking off Money Week in September 2018, Diane Maxwell, Retirement Commissioner reiterated the need for New Zealander’s to be adequately covered for any eventuality, referring to the fact that New Zealand has one of the lowest spends on insurance in the OECD. 

"We don't advocate everyone having every form of insurance - some costs you can absorb and your needs change over time - but insurance is there to make sure you don't incur a big, unexpected bill you can't pay. The risk is people are thrown into debt," Maxwell said.

Our lax attitude and “she’ll be right” approach to life could be to blame. But whatever the cause, it’s vital that Kiwis plan ahead to help deal with unexpected financial events by taking out insurance, having an emergency savings fund, and making a will.

A little planning and saving

It’s true that not all unexpected events are negative, but generally, the big ones will affect your financial future. Which is why it’s a good idea to think ahead: a little planning and saving now will make those unexpected events that much easier to handle.

Here are some of the steps you could take right now:

• Make saving an emergency fund one of your highest savings priorities. Saving just $20 a week adds up to $1000 a year which could be enough to cover an expected repair bill or emergency travel arrangements. Ideally, an emergency fund should cover around 3 to 6 months of living expenses.
• Get a life insurance policy so you and your family will be taken care of in any eventuality. The policy could be used to pay off any debt, help with living expenses, or pay for schooling in the event you’re unable to work.
• Decide who will benefit from your estate and assets in the event of your death by writing a will. If you die without a will, New Zealand law steps in to say who is entitled to receive your assets - so it’s vital you plan ahead so your family are well taken care of. 

Planning ahead makes it that much easier to deal with the unexpected big events in your life that could impact your financial future. If you’d like to talk to someone about getting your finances in order, get in touch with one of our mortgage advisers to book a financial review.

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