9 simple steps for a better relationship with money

Keep it simple

“Take your money back to basics,” Ruth recommends.  

This should start with an open, honest conversation with your partner, your family or a friend. Talk about how you view money, what your goals might be, and how what’s happening today – such as unemployment or reduced hours – might impact the future.

When you’re ready, and if you’re able to, consider reaching out to a financial professional for their advice too. 

Track your spending

Tracking your spending makes it easier to guide your decisions, and gives you more control over where your money’s going. Ruth suggests using an online app, coding transactions through your bank, or simply using a pen and paper to log what’s coming in, and what’s going out. 

Start a budget

“I started my budget in a notebook, then I used a spreadsheet, and now I use an online budgeting tool called PocketSmith, which is easy to use and pretty fun!” Ruth says.

A budget helps you identify waste, put money aside, and plan for the things you love. It also makes you more accountable in your spending, and more aware of how your spending affects your partner or your family, and vice versa. Plus, it gives you “permission to spend,” because you have a better idea of what you actually have to hand. 

Protect what’s important to you

Insurance is another line item on your budget. “You put petrol in your car, buy your groceries, pay your insurance,” says Ruth who, having lost her house in the Christchurch earthquakes in 2011, knows the importance of insurance firsthand. “It might be painful to see money going out each month that you might never need, but imagine if you did? It’s an expense you simply have to have.” It’s also advisable to regularly reassess your life, health and contents insurance plans, especially if or when your situation changes. 

Invest for your retirement

“You will get old, so plan for it!” says Ruth, and suggests using a KiwiSaver provider to help you invest for your retirement. “A lot of the millionaires I chat to credit budgeting and tracking their spending with getting them into the solid financial position they’re in.” 

Avoid debt

Ruth recommends paying off any debt you have quickly, and don’t take any more on. List your debts from largest to smallest, and pay off each one in turn – start with the one with the highest interest rate. Don’t think about good debts and bad debts either. “Debt is just money you owe somebody else,” Ruth says. 

Automate your bill payments

Automating payments will help even out your cash flow. If you’ve got big annual payments coming up, break them down into weekly or monthly payments instead. 

Establish an emergency fund

Having a stash of cash for a rainy day is crucial, as it stops people reaching for a credit card or getting into debt to get out of a sticky situation. “Your emergency fund should be between one and six months of expenses, and needs to be immediately accessible, so not tied up in shares or investments,” says Ruth. 

Be kind to yourself

If you find yourself in times of trouble, don’t beat yourself up about past mistakes. Instead, change what you can now, and don’t let the issue simmer. Seek help, talk to your bank, insurer or financial adviser, and start taking steps towards getting on top of your situation.  

Ruth has a glass half-full attitude to money, insisting it’s just about following a few simple steps: always spend less than you earn, don’t invest in dodgy things, and get rid of your debts. “Keep looking forward, and keep your chin up!” she says. “It’s OK to talk about your finances – that’s how you get through it.”