Why Financial Planning Matters in New Zealand

New Zealand is known for its high living costs, particularly in major cities like Auckland and Wellington. Housing costs have soared in recent years, and everyday expenses — from groceries to petrol — continue to climb. According to Statistics New Zealand, household costs increased by an average of 7.4% over the past year, driven largely by rising rent, food, and transportation costs. This financial pressure makes it harder for many people to save and invest for the future.

In addition, financial uncertainty is growing due to shifting interest rates, global economic instability, and changes in the job market. Without a financial plan in place, it’s easy to get caught in the cycle of debt and financial stress. A well-structured plan helps you:

• Understand your current financial position

• Set realistic financial goals

• Create a strategy for saving and investing

• Manage debt effectively

• Prepare for unexpected expenses

• Build long-term wealth and security

By taking control of your finances now, you can reduce stress, increase your financial confidence, and work toward the future you want.

Step 1: Assess Your Current Financial Situation

The first step in financial planning is to take an honest look at where you currently stand. This means understanding your income, expenses, debt levels, and savings.

Income

List all your sources of income, including:

• Salary or wages

• Side hustles or freelance work

• Government benefits or assistance

• Investment income

Expenses

Track your spending for at least one month to get a clear picture of where your money is going. Divide your expenses into two categories:

• Fixed expenses – Mortgage or rent, utilities, insurance, phone bills, and loan repayments

• Variable expenses – Groceries, dining out, transport, entertainment, and personal shopping

Debt

Write down all outstanding debts, including:

• Credit card balances

• Personal loans

• Car loans

• Student loans

• Mortgage

Savings

Review your savings accounts, emergency fund, and any investments you already have. This includes:

• KiwiSaver balance

• Investment portfolios

• Term deposits

Once you have a clear picture of your finances, you can begin to identify areas for improvement and opportunities to save more or reduce costs.

Step 2: Set Clear Financial Goals

Financial planning without clear goals is like driving without a destination. Setting clear, actionable goals gives you a roadmap to follow and helps you measure progress.

Short-Term Goals (1 year)

• Build an emergency fund

• Pay off credit card debt

• Start contributing to KiwiSaver

Medium-Term Goals (1–5 years)

• Save for a house deposit

• Pay off personal loans or car loans

• Start investing in shares or property

Long-Term Goals (5+ years)

• Build a retirement fund

• Pay off your mortgage

• Create passive income through investments

Ensure your goals are SMART — Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of saying, "I want to save money," set a goal like, "I want to save $10,000 for a house deposit within two years."

Step 3: Create a Budget That Works

A budget helps you manage your income and expenses, ensuring you can cover your needs while working toward your goals.

How to Create a Budget

1. List your total monthly income – Include all sources of income.

   
   

2. Identify fixed expenses – Rent/mortgage, insurance, utilities, and loan payments.

   
   

3. Track variable expenses – Food, transport, entertainment, and shopping.

   
   

4. Set spending limits – Based on your income and goals.

   
   

5. Stick to the 50/30/20 Rule –

• 50% of your income for needs

• 30% for wants

• 20% for savings and debt repayment

Budgeting Tips

• Use budgeting apps to track your spending.

• Automate savings by setting up direct deposits into your savings account.

• Reduce non-essential spending where possible.

Step 4: Build an Emergency Fund

An emergency fund acts as a financial safety net in case of unexpected expenses. Aim to save three to six months’ worth of expenses in a high-interest savings account.

Why Emergency Funds Matter:

• Protects you from job loss or reduced income

• Covers unexpected medical expenses

• Prevents you from taking on high-interest debt

Set up automatic transfers to your emergency fund each payday to build it gradually over time.

Step 5: Maximise Your KiwiSaver Contributions

KiwiSaver is a key tool for building long-term wealth and securing your retirement.

How to Maximise KiwiSaver:

• Contribute at least 3% of your salary (the minimum employer match)

• Take advantage of the government’s annual contribution match of up to $521.43

• Choose a KiwiSaver fund that matches your risk tolerance and financial goals

A small increase in your contributions now can result in a significantly larger balance when you retire.

Step 6: Manage and Pay Down Debt

High-interest debt, such as credit cards and personal loans, can quickly spiral out of control. Focus on paying off high-interest debt first using the debt avalanche or debt snowball method:

• Debt Avalanche – Pay off debts with the highest interest rate first.

• Debt Snowball – Pay off the smallest debts first to gain momentum.

Avoid accumulating more debt by reducing discretionary spending and sticking to your budget.

Step 7: Start Investing

Investing allows you to grow your wealth over time and create passive income streams. In New Zealand, popular investment options include:

• Shares – Invest through platforms 

• Managed Funds – Professional management with lower risk

• Property – Long-term appreciation and rental income potential

• Index Funds and ETFs – Lower fees and broad market exposure

Diversify your investments to balance risk and returns.

Step 8: Plan for Retirement

It’s never too early to start planning for retirement.

• Increase your KiwiSaver contributions if possible.

• Explore private pension options.

• Estimate your retirement expenses and adjust your savings strategy.

Step 9: Review and Adjust Your Plan Regularly

Financial planning isn’t a one-time task — review your plan every 6 months and adjust as needed. Key times to reassess include:

• Salary changes

• Major life events

• Market shifts

Final Thoughts

Financial planning in New Zealand is about more than just saving money — it’s about creating security and freedom for the future. By building an emergency fund, reducing debt, investing wisely, and maximising KiwiSaver, you can take control of your financial future.

Finpla. chat. can provide quick, personalised financial guidance to help you get started. And when you’re ready to put your plan into action, we’ll connect you with a trusted financial adviser to help you make informed decisions. Take the first step toward financial freedom today with finpla.