We’re back…..

We’ve been offline for a bit, but we’re back. We hope to bring you some great articles and thoughts related to the four elements of Fit 4 Life – Fitness, Finance, Faith & Friendship. Check our blog each week for an update.

In the meantime, if you live on the North Shore of Auckland, then come and visit the friendliest gym around. Not only do we have good prices, we also offer more than you might find at another gym – free programmes, free fitness assessments, free seminars when offered, free financial planning and more.

All of our prices, times and more info are listed on our website. Check each week for our latest webdeal.

You can call us on 0800 LIFEGYM.

 

Finance – Trimming Expenses

I thought I would blog this month on the subject of trimming personal expenditure – although I must confess at the outset that I’m not a huge fan of trimming expenses and cutting costs!

When it comes to the subject of personal finance (or even business and public finance, for that matter) there are two sides to the ledger. On the one side you have your income and profit, and on the other side you have your expenditure and/or loss. To me the income and profit side is the fun side, and it’s the side I spend the majority of my time concentrating on when it comes to the subject of personal finance. The reason is simple and logical; if you have enough money then you won’t (or don’t) need to be as concerned about the expenditure side, because you will always have enough funds to pay your bills and expenses!

Hence I find it enjoyable to participate in, study, and write about the activities of investing funds, the compound growth of money, how to maximise returns and track the growth of money etc., as it’s really quite fascinating to me. I don’t find it as much fun to have to trim expenses and cut things out of my life in order to meet budgetary constraints. Trimming expenses is quite depressing and seems to rob people, including me, of the joy of life – hence my reluctance to write this article!

The challenge is, of course, that if you have certain expenses which need to be paid and you don’t earn much money or if you don’t have much in the way of personal financial means, then you are left with really only two options; you either have to go into debt in order to fund a consumptive lifestyle (which has all sorts of negative future consequences, as the debt will have to be repaid one day) or you must trim your expenses and cut your spending until your income meets or exceeds your expenditure.

In fact, just last week the New Zealand Government released their yearly budget in which they outlined plans to trim government expenditure through proposing cutbacks to schemes like Kiwisaver, ACC, certain WINZ benefits as well as a few other areas. Many New Zealanders are complaining about what these proposed changes will mean to them personally, but the reason the Government wants to implement these changes is because they are currently borrowing around $380 million a week, or close to $20 billion every year, to fund consumption in New Zealand and this debt eventually has to be paid back – with interest. (And you thought you had problems meeting your mortgage payments!)

So here’s a few tips on trimming expenses which I hope might be of help with your personal financial situation.

 

Create a budget

You can’t trim expenses – at least not effectively – unless you know how much money you have coming in and to what areas and categories of spending you have allocated the money.

It’s surprising how many people don’t have a budget in place although they are not hard to set up. (In fact if you would like a free copy of a simple MS Excel budget spreadsheet from Fit 4 Life, please contact me at Bryce@htlministries.org.nz and I will email one to you).

Thinking through your expenses, collecting and tabulating your bills, and creating a simple budget is a very helpful exercise and is the first step to making significant savings when it comes to trimming expenses. If you don’t know how much you have coming in and where it is going, you will never be able to make any meaningful changes in your spending patterns.

 

Know your annual percentages

When it comes to trimming expenses it is helpful to know percentages. You would think most people know which of their personal expenses are the largest – and they probably do for big things, like rent or mortgage payments, and food etc.

However, for all the other activities where we spend our money during the year most people have very little idea of how much (percentage-wise) of their money is being spent in certain categories.  Off the top of your head, for example, how much are you spending on eating out, or on your cell phone plan, or on your annual credit card fees, or even on your pet?

Following on from my point on budgeting, I find that by converting all of our personal and home expenses – whether they are due on a weekly, fortnightly, monthly, or 6-monthly basis etc – into an annualised figure and then converting that figure to a percentage gives me very useful information when it comes time to make cut backs in spending and trimming expenses.

For example, our home budget shows me that we are currently spending about 5.4% of our total annual income on power (electricity), whereas we are spending only 1% on water usage. If I wanted to start trimming costs, a simple percentage comparison like this shows me that it will make more sense to begin educating my kids about turning the lights off or powering down electrical appliances like computers, the television and so on when they are not being used, rather than getting upset with them for leaving the water running while they brush their teeth. The percentage calculation helps me see that the savings we could make by reducing our electricity costs are potentially much greater than by our household taking a fastidious approach to water conservation.

Knowing the percentage of annual spending in a particular category also helps me gain perspective in other areas too. For example, when I get my annual car insurance bill for $350 it’s easy to react about how outrageous that is, but I can see on my budget spreadsheet that it represents only 0.3% of total annual expenditure. In comparison, me buying my lunch at the local bakery twice a week at $5 per time adds up to 0.7% of total expenditure throughout the year, so that’s probably a better place to look at trimming – rather than me shopping around on the internet for a couple of hours looking for a cheaper insurance company!

 

Go for the deal rather than being fastidious

When it comes to cutting expenses it’s sometimes easy to slip into the trap of saving pennies when we could be saving dollars. As an example, there are two movie theatre complexes which my wife and I frequent. One is 10km round trip from our house and the other is 20km round trip. A fastidious cost cutter might reason that, with the price of gas around NZ$2.00 a litre and the average car consuming 1 litre of petrol for every 12km or so, it costs around $1.67 to drive 10km, and so that would mean we could potentially save $1.67 by frequenting only the closer movie complex. Also with the price of an adult movie ticket costing $16 at the nearby complex – compared to $16.50 at the further away one – it would seem like a no-brainer to frequent only the closer theatre, as we would save $3.67 each visit. However this type of trifling-saving pales in significance to ‘going for the better deal’.

With the price of movies as they are, it makes better sense to buy tickets in bulk and/or go on the cheap night. On Tuesday nights movies costs $11 at both complexes, so the total cost for my wife and I to see a movie on a Tuesday night at the further away theatre is $25.33 (2x$11 +$3.33 petrol) compared to regular price $33.67 (2x$16+$1.67 petrol) at the near complex.  That’s a saving of $8.34 and that is reasonably significant. If we went every two weeks to see a movie it would add up to a saving of around $200 a year. (Of course, going on the cheap night to the closer theatre would cost us only $23.67, which is $1.66 cheaper, but then you’re really only saving the money on petrol for driving 10km less which is not the primary cost – or the primary reason – for going to the movies!)

You can also buy booklets of 10 tickets for $135 ($13.50 per ticket) at the far-away theatre and you can go anytime. That discounted price works out to be 22% cheaper than buying the regular ticket for $16.50 and that represents a decent saving of $6.00 for my wife and me each time. (In fact, a book of 10 tickets at the closer theatre costs $140, so there’s really only $0.67 cents difference between the two theatres to go any night of the week if we go for the deal!  ((2x$13.5 tickets +$3.34 petrol) – (2x$14 tickets +$1.67 petrol) = $0.67))

I also get our BBQ gas bottle filled at the local BP station and I have a discount card for 6 bottle fills. The card gives a $3 discount on the 2nd fill; a $4 discount on the 4th fill; and a $5.00 discount on the 6th fill. That’s a $12 saving over six fills and – with an average fill costing me around $35 each time – my saving after six fills is $12/$210 or ~5.7%. That’s not huge – but I’ll take it, because it’s a deal and I don’t have to go out of my way or dramatically change my spending habits!

My point here is that when trimming expenses you don’t have to turn into some kind of cost-cutting nut or have to radically alter your life. But you can make some reasonable savings if you ‘shop for the deal’. Lots of stores give deals so start asking around… you might be surprised what you find.

 

Technology is helpful but beware of ‘sales’ and impulse buying

Last week I went out to buy a book for one of our Fit 4 Life volunteers as a thank-you gift to them. I knew which book they would really like to own, and when I found the book on the bookstore shelf its price was NZ$157. I was almost at the sales counter getting ready to buy the book when I had a thought, and realised it might be cheaper to order the book through Amazon.com.  I called my wife on my cell phone and it turned out that she was by her computer.  She checked the price and – even with shipping from the USA included – we were able to buy the book for NZ$90 and saved $67. (It also arrived within four days which was impressive).

All that to say that modern technology can be a great way to save money if you know how to use it wisely. However the internet, or any modern media like TV or radio for that matter, also has a huge downside to it in that you are constantly bombarded with advertising which makes you feel like you just  ‘have to buy’ something that ten seconds before you never even knew existed!

Also, one of the greatest marketing gimmicks is when something is advertised as being ‘on sale’. Just because something is marked as ‘40% off’ the regular price doesn’t mean you have to buy it! In fact if you have not budgeted for it and you don’t really need it, then all you are doing when you buy something on ‘sale’ is spending less money than if you bought it for the full price!

You do not save money just because something is on sale. You only save money if you need the product or service, you can afford it and then (if you’re fortunate) you find the product on sale for a cheaper price somewhere else – like my earlier example of buying that book.

The advertising and marketing industry is set up to create dissatisfaction. They are very good at it and so you constantly need to be on your guard. In fact our church pastor had a good, practical suggestion last week to help control impulse spending. He said if you feel the urge to buy something, go home and wait two days and think about it. After two days if you still feel that you really need the product – and you can afford it and have budgeted for it – then go back to the store and buy it.

Watch out for impulse buying and the deadly ‘sale’. These practices can really hurt your wallet – especially when you are trying to trim expenses!

(I should also reveal that when I was trying to buy that book I failed to get on the phone and call around the different bookstores to find out the price, so I ended up driving to three different bookstores before I found it and wasted about $7.00 of gas in the process! But hey – that’s life, and nobody does it perfect all the time!)

Here’s to intelligent and practical ways of trimming personal expenses…

Bryce – Fit 4 Life Director


 

Finance – The 8 Habits of Wealthy People

Steven Covey’s book, ‘The 7 Habits of Highly Effective People’, is a great read and a book that had a significant impact on my life. (I recommend that you get a copy if you haven’t read it already).

However, seeing this is a blog entry about finance, I thought I would write about eight habits that wealthy people develop. The good news is that – apart from possibly the last one – we can all develop these habits which can help us increase our wealth.

1.    They have a healthy attitude towards money

Probably nothing determines a person’s ultimate financial success more than their attitude towards money. If money is nothing to you then you will probably not end up with much; if it is everything to you, then you will probably die as a lonely, miserable accumulator with only money to show as the value of your life – a wretched end indeed. It’s simplistic to say that the middle ground between these two extremes is the best place to be, but everyone has to make some choice as to how important – or not – money is to them and to live their life in light of that conscious decision. What is important is to know that your attitude towards money will affect your life, so strive to have a healthy attitude towards money. Money is not everything – but it is also not nothing either.

2    They plan their success and set financial goals – preferably in writing

People who become wealthy always have a plan. Ignoring the lotto millionaires who win by chance (and who often lose it, as they know nothing about money!) no-one has achieved lasting monetary success without having a plan. While it may not have been outlined in painstaking detail, it usually involved achieving a certain monetary goal within a certain period of time. Often the most successful people have their plans written down. Why do you suppose that is..?!

3    They put their plans into action and stick with them

This is the toughest part. The wealthy are those who not only make plans, but they also act on them. It is not enough for a person to ‘want’ to be wealthy. Desire is insufficient; it must be accompanied by taking action and making the plan become a reality. Also, during the hard times and challenges that undoubtedly come about, wealthy people continue to stick with their plan through thick and thin.

4    They develop ‘money-awareness’

They wealthy are aware of money and how it works. They know that even small amounts can grow into large sums, and so they don’t like spending it but are constantly looking for more opportunities to invest their money and keep it working for them. They are always looking for ways to make and save more money. They convert temporary income into permanent income and they save something out of every dollar they earn – and get full value from every dollar they spend. They also avoid bad debt – like credit cards and consumer hire purchase – and they avoid fad investments and frivolous spending like the plague.

5    They constantly seek knowledge

Wealthy people are always looking to accumulate more knowledge. You will find that they read – and they read a lot!! They know that knowledge is one of the keys to increasing wealth. The home of every wealthy person contains an extensive library filled with books on finance, investing, law, history and biography. Again, why do you suppose that is? The wealthy also ask for – and listen to – professional advice, but do not accept it blindly. They will utilize the services of professionals such as lawyers, accountants, brokers, financial advisers etc., but they will always make their own decisions when it comes to managing their wealth.

6    They don’t follow the crowd.

If you do what everyone else is doing you will end up with the results everyone else is getting. Wealthy people do not follow the crowd, as they know that the crowd is usually wrong. They forge their own path and blaze their own trail to wealth. (If you’re short of ideas, read biographies about the lives of successful people which can help give you ideas of how to blaze your own trail)

7    They protect themselves from unforeseen events

The wealthy insure themselves against unforeseen investment disasters by using four means… (a) Knowledge (b) Diversification (c) Observation, and (d) Discipline. They know that the future is uncertain and that knowledge – especially of the past – is the key to protecting themselves from financial disaster. They also don’t put all their investment eggs in one basket, they keep an eye on their investments through regular check-ups, and they have the discipline to sell investments when they become overpriced and buy them back when they are being sold for a song!

8    They start early in life

It requires time for money to compound and grow, so it helps to get a head start in life. The super-wealthy all started young. Even delaying investing by just 10 years can radically reduce the amount of money you accumulate at the end of your life, as most of the money you make is made in the last five to 10 years. Starting in your teenage years is better than delaying until your 20’s. But whatever your age right now, it is never too late to begin. We’ll all be a decade older in ten years time!

Bryce – Fit 4 Life Staff


Finance – Sarah’s Financial Fitness – How to Shop Better!!!!!

I love shopping. Bargain shopping, window shopping (not kidding), second-hand shopping. How do I even begin to describe it? The sights, the smells, the endless possibilities… aahhhhhh. I may have little to spend but I don’t have a problem spending it! At the same time, believe it or not, I try my best to be clever about it.

Shopping can actually be fairly complicated if you are trying to make the most of your money. Here are some things that may help if you like shopping too or are just curious. I’ve split it into three parts: Before, During and After. (I will use clothes as the shopping item of choice but it can be translated to other objects-of-weakness.)

Before You Hit The World of Mall (or similar)

  • Figure out when you are at your weakest. For example, I love shopping alone and with time to spare, so if I don’t have the funds to be doing this, I try to avoid it or only go to malls with a friend, then I know I will not be as tempted. On a serious/side note: If you suspect you have an issue on a deeper level, like buying things makes you feel good because you feel ‘in control’ or it is a way of escaping areas of life that are difficult, etc… talk to someone you trust about it. This may not be bad if it is one-off or a short-term thing, but may be harmful in the long-run.

  • Every year or half-year, write down what you think you need in the months coming up. (Something fun to do when you are bored or waiting around.) This list helps you strategise when you are wandering in the stores, so you don’t just spend on random things. For example, a special wedding coming up or new basics, etc. This also helps when you hit end-of-season sales racks. Look through that list now and then, be honest and keep this list as practical as possible.
  • Staples or major buys are worth a think-through.

Items like winter coats, boots, jeans and special dresses need to be carefully shopped for so you focus and don’t overspend.

    • Questions like:
      • What is my budget?
      • What do I want this for? (Everyday wear, evening wear, special event wear, etc.)
      • What sort of style coat/jeans/boot do I want? (Short/long coat, straight-cut/skinny jeans, scrunchy/thigh-high boot, etc.)
      • What weather will I be wearing it in?
      • What colour do I want/will suit my other clothes?
      • What shoes do I already have to match?
    • You may not have to answer all these questions but answering a couple of them will help.
  • Set limits or wait.

If you know you tend to be a new-season buyer, where you see a new lot of clothes come out and you go into a frenzy over the fresh colours and fantastic styles of Spring, or simply see-and-want-now, then anticipate this and set aside a limit OR anticipate and tell yourself to wait for a sale. For example, I know I go crazy for summer dresses, so I may try to think beforehand that I will get one if I find one under $40 (if I have $40) and that will be my summer buy…

  • Narrow the options.

Figuring out your own sense of style, colours and what suits your shape can be really helpful because these will help you narrow your choices.  This involves time and effort to look through your closet with a critical and truthful eye. You may need help from someone else (like a friend who knows what they’re talking about or an actual style expert) but you will need to be prepared for them to say things you may not want to hear. However, this is a good long-term strategy as you will then be spending on things that look good on you instead of wasting money or random items you end up hating. Plus, when you like an item you will probably wear it more times over- which is value for money.

During: When You Are In The Danger Zone

When you are in the shops and have found something you like, here are some things to do.

  • TRY IT ON (YOU MUST)

Note: Unless you are can’t figure out how it is supposed to fit, avoid asking the shop assistant what they think, they usually will be able to convince you to buy it- somehow.


  • BREATHE. Give it some time and thought.

For example, leave the store and come back later. I personally like to look through other stores before I come back. You may find the ‘need’ for it has lessened. Sometimes I even leave it for days and that can be a good judge how great the item is. Some of us may need to go home and stare at the bank statement first too.

  • ASK QUESTIONS

Now that you have tried something on, emotions are running high. Wait! Here are some good questions to ask yourself:

    • Do I have the money for this? (You may want to write this on your bank/credit card with a Vivid..
    • Will this actually match something I have? (Make yourself come up with at least 2-3 things you already have that will match.)
    • Will I wear really wear this? (Picture yourself in it, next to your friends, walking around the house, at the cafe, whatever… stuff often looks better in the World of Mall, than in real life where you may run out of the house with your hair wet and ketchup from your takeaways may not look great on the white shirt)
    • Can I move? (Watch for space to eat, butt crack when you sit, too much cleavage if you had to lean over, etc.)
    • Hello, what exactly is this for? (How many ‘nicer’ dresses do you need when you work Monday to Friday at a gym, Sarah?)
    • Do I already have something that looks SIMILAR? (How many black cardigans do we need people?)
    • Will I need to buy a couple more things for this outfit to work? How much will that cost?
  • Don’t settle for less. If it doesn’t fit great, the colour doesn’t totally suit you, and isn’t really fabulous, then NO. PUT IT BACK. Having high standards also helps you save money.
  • If you are just having a bad day and need to buy something/anything, STOP! Put that top back on the shelf. Go and buy a thing of soap, toothpaste or toilet paper. There is also always scotch-tape for gift-wrapping. Those are necessities that are super irritating to run out of. Or go have an ice-cream cone.
  • SALES- My fave!

These days, sales are going on all the time, not just at end-of-season. Personally I often only consider buying things if they are below original price. But don’t be led astray. Apply the same questions as previously mentioned, and:

Have a strategy. For example, as a visual person, when I approach sales racks I look for the right colours first, so it is less of a waste of time than looking at everything.

    • Go back to point 4 above- is it great? If not then say, NO.
    • If it wasn’t on sale, would it be an item I would look at?
    • If it is at the end of a season, consider seriously if the item is a style you will wear next year, etc.


Aftermath: Back To Reality of Home


  • Try it on again.

    • Response A: If you still like it and spent your money well then feel free to rejoice in your wares!
    • Response B: If you now don’t like it and feel uncomfortable or know that you overspent, RETURN IT or EXCHANGE it for store credit. (Exchanging it for credit may not always make sense but it could work if it is at store you can buy a future items or Christmas presents at.)

OKAY, so some of you may be laughing at how hardcore (and long) this post is or how serious I am about shopping! I don’t do this as often as it sounds haha… but I do enjoy it, as you can see, there are also other aspects of shopping we can expand on another day, like how to buy the right things and how to shop if you have shopaphobia. Meanwhile, let me know if you ever need any help.

Thanks for reading!

Sarah – Fit 4 Life Staff


Finance – Four Reasons Why You Should Learn to Invest

There are only two people who can invest your money for you. One of them is you and the other person is someone else…

While some people invest through a family member, relative or close friend, the vast majority of people tend to hand their hard-earned money over to a ‘someone else’ to invest on their behalf – often to someone whose name they don’t even know! But whoever the nameless and faceless investment managers, bankers, financial advisers or money managers are, I maintain that no-one will ever manage your money as well as you can.

Those familiar with the world of investing will know that people like Peter Lynch, George Soros, Warren Buffett and Julian Robertson did a pretty good job of making a lot of money for their friends, relatives and clients – and that’s true. However, your chance of finding the next Warren Buffett or George Soros to invest your money for you amongst the tens of thousands of investment ‘professionals’ circling the globe amounts to a snowballs chance in hell.

Despite the financial industry’s constant and pervasive marketing campaign of implying to the general public that investing is too complicated and best left to the professionals, academic research has overwhelming shown that the vast majority of financial professionals do not outperform the market over the long term. Also, by handing over our financial future to others we dis-empower ourselves from learning and growing in our own ability and capacity to invest, which is a wonderful skill to have. In addition, letting someone else manage our money guarantees underperformance from us having to pay management fees for the ‘privilege’ of them managing our money (while they underperform with it!)

There’s really only two issues holding you back if you aren’t investing your own money already. The first is competence – knowing how to invest effectively. And the second is motivation – having the internal drive to begin and keep going.

I’m not advocating rash decision-making or behavior when it comes to such an important topic as your money. Investing on your own does involve having to learn how money works, what kinds of investments are out there, how they tend to perform, which ones best suit your goals and personality, what the risks are, etc. Learning these things does take time and effort on your part – but it is learnable. So while you’re learning to invest perhaps it might be best to leave some, or even all, of your money invested with the ‘professionals’ until you feel ready to fly solo.

There’s also a lot of information available today to teach you how to invest, so this blog article will focus on what I think is the more important issue for most people – finding the motivation to start investing on your own and to keep going.

Here are four reasons why anyone with reasonable intelligence and emotional health can, and should, learn how to invest their own money…

Because no-one will care about your money as much as you do

Without ignoring that money needs to be managed by someone with good character and reasonable competence (after all, who trusts an incompetent thief with their money?!) when it comes to the matter of caring about you and your money, no-one will ever care more than you!

While financial institutions say they care, the reality is that all financial organizations are started with the goal of making a profit. In other words, they exist to make money and a lot of the money they make will come from you and others like you via the fees you pay to them.

Also, all organizations are made up of people, so anyone you give your money to manage, unless they are paid solely from – and for – performance, will be paid a salary from your fees. Because most people are self-interested and want to keep their jobs, if a choice has to be made between them making the maximum amount of money for you or them keeping their job, they will not always act in your best interest to get the best returns on your money, but rather play it safe to ensure their own employment.

Making money requires an acceptance of risk. Without taking some risk there is no chance of making a return on the money. Yet taking on risk means that if it goes wrong and money is lost, they may be in danger of losing their job. Hence most investment professionals play it safe so that – at worst – they hopefully won’t lose too much, thereby ensuring their job security. (This is as it should be of course, as you can’t have investment professionals acting in a cavalier manner with millions of dollars of New Zealanders’ savings). However, in lowering the risk and playing it safe your return is often lowered, and yet you continue to be charged the same amount of fees for their underperformance!

Because you can do it yourself

Think about all the ‘professional’ investors out there. How did they get started? Who taught them? How did they learn to invest? Everybody starts out as a beginner, so if they were able to learn how to invest then anyone with sufficient motivation can also learn how to do it. In fact, it’s never been easier.

The age we find ourselves living in is the greatest of all time to be a private investor. We have more resources, information and technology available to us than at any time in history. Not so long ago financial information was hard to come by. Financial books were few in number and decent financial books even harder to come by. Today it is a much different story.

Substantial bookstores like Dymocks and Borders now carry thousands of financial books and titles covering every possible topic with regards to money and investing. Or, if you can’t afford to buy financial books, you can use your local library which will have hundreds of titles for you to choose from. Also the internet has revolutionized the way we receive information. Today in just a few hours of searching you can uncover information that would have taken you years to find only a decade ago.

Technology advances are also making investing simpler. Personal computers have revolutionized the investing process. I invest from the privacy of my home using a laptop computer (that was given to me for free). Combining the computational and display power of a free laptop with cheap internet, I am able to move hundreds of thousands of dollars around with the click of a mouse and I don’t have to talk to anybody.

But like that famous philosopher, Spiderman’s Uncle, once said, ‘With great power comes great responsibility’, there are certain risks that must be accepted by the private investor. No-one is there to supervise me or prevent me from making a foolish mistake, so it is critical that the private investor develops their own rules, guidelines and disciplines to avoid potential financial disaster.

But again, these are all things that can be learned and/or created by yourself when you decide that it’s worth doing it yourself and you take the time to learn.  You can do it yourself!

To assist with the costs of modern living

One thing we can know with certainty about the future is that it will be more expensive than today. Prices will keep going up, because inflation is a reality of the modern world and inflation represents a huge challenge to our future wealth. The NZ Government seeks to keep inflation under 4%, but even at 3.5% inflation in 20 years time that means our money will buy only half of what it buys today. Or, looking at it another way, every product or service we wish to buy in the year 2030 – from Aardvarks to Zumba classes – will cost at least twice as much as they do today, and most likely a lot more.

Earl Shoaff once said, ‘The problem is not that things cost too much; the problem is that you can’t afford them’. So rather than continuing to complain about a problem that isn’t going away, it’s far better to focus on a solution, which is learning to invest so that you can have more money in the future.

There are two ways that people often sabotage their financial futures; the first is by not getting reasonable returns on their money, and second is by being in debt for a long time.

At a 3.5% inflation rate, your investments need to return around 5.0% (before tax) just to keep up with inflation! If you are paying hefty fees to investment managers – who have your money stuck in underperforming investments – then you are falling way behind. But if you know how to seek – and find – higher rates of investment returns and pay less in fees allowing your money to at least keep up with, if not exceed, the eroding effect of inflation on your money then you will be in good standing for the future.

Debt is a challenge to be reckoned with. Financial debt we incur must be repaid and the accepted form of repayment is with money. Selling off your children doesn’t cut it anymore! However, financial institutions want to keep you in debt for as long as possible – sometimes for 30 years or more – and pay high interest rates of 8% or more (and sometimes 25% or more on credit cards!), again for as long as possible, because they profit greatly by having you pay them compounding interest for a long time.

If you have to take a long time to pay your debt off it means your financial future can be compromised, because by paying them interest you lose the potential opportunity of investing that money for yourself. However, by minimizing debt and learning to invest you can turn the tables around and start having compound interest work in your favor and not against you.

Learning to invest gets your capital working for you rather than for someone else, helps eliminate debt, and allows you to face the future with a smile on your face rather than with uncertainty and even terror!

Because a lot of money will pass through your hands

If you work for 40 years from age 25 to age 65, even if you never get paid more than the median New Zealand wage of $538 per week (June 2009 survey, Statistics NZ) over all of that time, then $1,119,040 will pass through your hands. Most likely a lot more than that will come your way, which means that almost every New Zealander will be a millionaire in their lifetime.

Again quoting Spiderman’s uncle, ‘With great power comes great responsibility’. Having a lot of money brings responsibilities with it – not only for ourselves and our loved ones, but also towards the society which allowed us to create and/or receive it. The actress Susan Sarandon once said, “Everyone has a responsibility towards this larger family of mankind, but especially if you’re privileged, that increases your responsibility”. I agree with Susan… It is our moral duty to use the money we receive wisely and contribute to making society a better place for all. Taxation partly serves as a conduit to return some of our money to society, and paying taxes allows our nation to provide us with benefits such as roads, police and defence, courts and the legal system, healthcare and education.

But having great wealth also allows us to make our own choices about where our money goes and how to improve our nation and the world, by giving part of our wealth to charitable causes such as relief of poverty, care and protection of children, care of the infirm and the aged, spiritual and moral advancement, the arts and music, and global protection and care of the environment.

Of course to give money away you need to have a surplus, and that’s why learning to invest can not only generate extra means for your own present and future needs, but it can also provide you with additional wealth to distribute to worthy causes and people in greater need. Money can be a wonderful force of good in the world – but not if it ends up in the hands of evil people who don’t share. Better for more money to end up in your pocket rather than theirs… Like Jesus said, ‘It is more blessed to give than to receive’, and anyone who gives will realize this to be true. By having more money to give away, you will experience the joy of helping the world and others.

Learn to invest. The skill will serve you well for a lifetime.

Bryce Staveley – Fit 4 Life Staff


Finance – My Little Stash of Cash

In marriage, money is something that can become a sticky topic.

One thing I’ve appreciated about our budget is that it contains a weekly allowance for both Jason and I. This gives us each a bit of freedom to enjoy some small treats and prevents quibbles about, “Why are you buying that, do you need it?” kinda stuff. (My kind and generous husband even decided to allocate me double of what he gets in our weekly allowance! :))

Because I’m the more ‘dangerous’ spender between the two of us, I have a separate account for this allowance, so it is limited to what’s in it. I know, if you see the bank statement you will laugh because it is a separate little account for not very much cash! You don’t have to do this, but it helps me. (And probably helps Jason feel safe haha.)

This means that every week I have some money to do ANYTHING I want with- a magazine, a random coffee, a piece of clothing or other fun things. I love this as I don’t feel guilty buying something that I may not necessarily need once in a while and don’t get worried that it will eat into our budget. Even though it is not a massive amount, it is still great, as I can accumulate or save up enough to buy larger items over months.

The tricky part would probably be defining what kinds of things would go under ‘allowance’. (Oh and the word ‘allowance’ might sound funny/childlike to some. You can call it something else if that word doesn’t work for you.) It is probably wise to agree on a clear definition together.

For us, the point of an allowance is to give us a bit of a breather to spend on unimportant-but-fun things we each desire, but as the amount is limited, there are boundaries that protect our overall finances. Please note that this is a minor category in the whole realm of budgeting, but I feel that this has helped us reduce some stress in handling finances within marriage.

hmmm. I initially thought to write about something a bit more exciting, like how to spend money! But I think I’ll leave that for another day…

Don’t forget though that members of Fit 4 Life can receive free financial planning so sign up today for your appointment!!!

Sarah – Fit 4 Life Staff

Finance – Budgeting, buying online and paying less – Tips to help with YOUR finances!

This week is my turn to blog about finance.  This is not an area that I claim to have any special skill in, but I do have a few ideas that I have learned from others over the years.  I hope that these nuggets help you to do more with what you have.

The first thing I learned was from my Dad.  He is meticulous at tracking where his money goes.  This may not increase the amount you have but at the end of the month you know what you have spent money on and can adjust where needed.  Coming up with a simple system of recording your receipts and compiling them can make a huge difference.

Following on from that is budgeting.  Actually coming up with a simple budget that is realistic and comprehensive can make a huge difference between living paycheque to paycheque and creating some savings.  If you are a member at Fit 4 Life I would recommend making an appointment with Bryce if you want to learn how to put together a budget (it is not as hard as you may think).

Next is the fun part: spending! Everyone wants to find a good deal, but not everyone knows where to look or how to find one.  The most important thing is research.  There are lots of places where you could potentially get a great deal on something – Trade Me, Trade & Exchange, 1 day sale websites and store sales are just a few.  Here are some tips on Trade Me (and any other online auction):

  1. Don’t get too emotionally attached to the item.
  2. Make sure you ask questions and research the item being sold.  (I have been burned on this one several times. I thought it was a great thing but when it arrived – oops not quite what I thought).  If the seller is unwilling to answer questions or is not friendly – don’t bother with it.  If you research ahead of time and find out how much the item in question is actually worth and how available it is then you can make an educated bid or stop yourself overpaying or worse buying something used that you could get new with a store warranty for $5 more.
  3. Autobids are your friend.  Determine ahead of time the maximum that you want to spend then place the autobid and walk away.  Make sure you are careful to select the autobid button.  Be prepared for someone to beat your bid by 0.50 (which can be very annoying).
  4. Beware of cheap knockoffs.  A lot of stuff on trade me is cheap junk mass imported from Asia.  I am not saying things from Asia are bad, I am saying cheap knock off things from anywhere are.

When it comes to buying electronics there are some great ways to make sure you get a good deal.

  1. Once again do your research.  Store salespeople love to up-sell so that they get more commission.  Visit some good electronics stores and ask lots of questions, find out which brands have the accessories’ and features that will suit your application.
  2. Go to www.pricespy.co.nz .  This website will give you a summary of prices from a whole bunch of retailers around NZ.  You might find the same item at a small store for way cheaper than you found it while doing your research.

I hope this info helps you make the most of your finances.

Feel free to contact me if you want some more details.

Jason – Fit 4 Life Staff