Hartmann says having emergency savings is the foundation of being financially stable.<\/p>\n
Almost a third (28%) of Kiwis say they couldn’t cover an unexpected $500 bill, according to a recent Kiwibank survey. Photo \/ 123rf<\/p>\n
Settling in (late 30s and 40s)<\/p>\n
Often a stage in life when people are settled in their career, have taken on mortgages and have young families, financial mistakes at this stage can have major short- and long-term implications.<\/p>\n
The power of mortgage repayments<\/b><\/p>\n
Hartmann said not knowing how much power someone has to restructure a mortgage in their favour could end up costing them tens of thousands of dollars in repayments.<\/p>\n
\u201cMortgages are set up very much in favour of the lender to guarantee repayments over decades and it comes at a certain cost.<\/p>\n
\u201cBut the repayments actually have a lot more power. Even tweaking those repayments can make an outsized difference in terms of how much interest you pay and how long it goes for.<\/p>\n
\u201cNot looking at how much anyone, a borrower, can impact the outcome would be a costly mistake.\u201d<\/p>\n
Not looking long-term<\/b><\/p>\n
\u201cPeople in their 20s, they might not run their long-term numbers because their life is not settled. But the moment you\u2019re kind of settled, to not look long-term and run, for example, some numbers for retirement \u2026 means that you\u2019re not taking advantage of time.<\/p>\n
\u201cThe earlier you run those numbers the easier it is to make small tweaks that can get you on track for the long term.\u201d<\/p>\n
The role of transferring risk to insurance companies<\/b><\/p>\n
Hartmann said some insurance products are typically left a bit too long before people take them up.<\/p>\n
\u201cProbably when people are in their 30s, for example, they\u2019re not really understanding how, for example, it would play out if they experienced disability or trauma.\u201d<\/p>\n
Income protection also gets overlooked early on, Hartmann said.<\/p>\n
\u201cSomebody in their 30s, who\u2019s settled into their career will probably not realise how valuable that career is in the aggregate \u2026 <\/p>\n
\u201cThat\u2019s actually the biggest asset they have because over time they\u2019re effectively going to earn millions of dollars.\u201d<\/p>\n
Later years (50s and 60s)<\/p>\n
Drawing down savings for retirement<\/b><\/p>\n
Hartmann said it was important early to look at how much savings you\u2019ll have built up when you retire and how you will draw it down.<\/p>\n
\u201cThat is a really difficult moment because nobody gets any practice at that, and nobody has any recourse at that stage to do it over if they get it wrong. <\/p>\n
\u201cIt\u2019s one of the hardest things to do because there\u2019s so much uncertainty.<\/p>\n
\u201cIf you take a look at it earlier, then you can start to make plans for your spending in retirement and get through these very challenging situations of actually making retirement savings stretch above NZ Super.\u201d<\/p>\n
Making retirement savings stretch above NZ Super can be a challenge. Photo \/ 123rf<\/p>\n
Hartmann added that a major mistake some people make is thinking they need to close down their KiwiSaver when they hit retirement and that their money should not stay invested.<\/p>\n
\u201cRetirement can be a very long time based on longevity stats.<\/p>\n
\u201cTo not understand that money needs to stay invested and keep growing for the long-term during retirement would be a misstep.\u201d<\/p>\n
Holding onto insurance products too long<\/b><\/p>\n
Premiums can be expensive. And if you\u2019re still paying for life insurance that was set up to cover young family members who are now adults, it may be time for a rethink.<\/p>\n
\u201cPeople tend to hold onto them perhaps a little too long until it becomes quite uncomfortable and [they] could have just let some things go,\u201d Hartmann said.<\/p>\n
\u201cIn your 50s, 60s, when you\u2019ve built up some wealth, you can cover more of your risks in different ways, perhaps more on your own.\u201d<\/p>\n
It\u2019s not too late to make changes<\/b><\/p>\n
\u201cLater on, it\u2019s more about disempowering attitudes that it\u2019s too late to make a difference, when clearly there are opportunities.<\/p>\n
\u201cGiving up on it as too late would be a major mistake.\u201d<\/p>\n
Cameron Smith is an Auckland-based business reporter. He joined the <\/b>Herald <\/b>in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics<\/b>.<\/p>\n","protected":false},"excerpt":{"rendered":"He said mistakes young people make around interest often involve things like car loans, credit cards, personal loans…\n","protected":false},"author":2,"featured_media":620997,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[177],"tags":[262217,319,103935,79,296,262218,27449,53826,18,1652,1729,846,19,17,3255,68495,163821,102985,2034,10658,234,235,228907,3887,4534,132510,184375,1214,9938,121734,194345,16404,21003,39627],"class_list":["post-620996","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-along","tag-at","tag-biggest","tag-business","tag-career","tag-costing","tag-dollars","tag-each","tag-eire","tag-family","tag-finance","tag-financial","tag-ie","tag-ireland","tag-life","tag-looking","tag-making","tag-mistakes","tag-of","tag-personal","tag-personal-finance","tag-personalfinance","tag-raising","tag-retirement","tag-stage","tag-starting","tag-tens","tag-the","tag-thousands","tag-towards","tag-whether","tag-young","tag-your","tag-youre"],"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/620996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=620996"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/620996\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/620997"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=620996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=620996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=620996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}