In our earlier post, we talked about some common mistakes that are negatively impacting financial life and are hurting both now and at retirement. They are set out below.
1. Lack of a detailed budget
2. Inadequate or non-existent tax planning
3. Unplanned superannuation
4. Incorrect asset and income structures
5. Suboptimal debt structure
6. Insufficient insurance coverage and structure
These lead to overpaid tax, missed investment opportunities and unacceptable risk.
Generally, people tend not to restrict spending, especially those earning good money or have credit cards. As an example, there is a difference between buying a branded and expensive dress or an unbranded and reasonable priced dress as the premium paid for the branded dress becomes “wasted cash” for the want of a better expression.
Quite simply, without a budget, cash inflow and outflow are not well managed which often leads to overspending. The importance of making a budget cannot be overemphazied. Below are five good reasons why everyone should create and stick to a budget, especially in a pandemic.
1. Helps to ensure you spend money on essential items, in particular where cash is king in a pandemic!
2. Helps to keep track of spending for the long term prize/goal, whether is to save up for extra cash reserve or buying a property;
3. Helps leading to a happier retirement as more focus is on wealth creating opportunities. Remember, when there are risks they come with opportunities;
4. Helps to prepare for emergencies, especially in COVID-19 season; and
5. Helps shed light on bad spending habits.
Do any of the reasoning apply to you? Are you encountering financial issues now or in the near future?
To receive your complimentary consultation to assess your cashflow, risk profile, financial position and structures, click here https://nztaxprop.co.nz/contact-us to enter your details and we’ll take it from there.
Disclaimer: No liability is assumed by NZ International Tax & Property Advisors Ltd for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.