You may find yourself – as I have a few times – tracking every cent you spend, trying to rein in expenses and find a way out of one hole or another.

While tracking your money is important, it only goes so far. It’s definitely valuable to see where your money is going, and to check that things are tracking to plan. However, trimming off a coffee, bagging a lunch or clipping coupons generally won’t be enough to turn anyone’s finances around.

When we find ourselves with a magnifying glass, looking to shave off expenses here and there or squirrel something away, we may be missing the big picture. It’s time to take hold of the movie camera and pan out. In that spirit, here are some of the big decisions and habits that can really make a difference to your net worth throughout life:

Borrow only what you need

People tend to borrow as much as they possibly can, not just what they need. You can see this future-defeating pattern everywhere, whether it’s for personal loans, car loans, credit cards and of course mortgages.

How much to borrow is an especially important decision when it comes to student loans, which, despite being interest free (if you stay in country), will still take many years of working to pay back.

A credit limit is not really your money, it’s just how much you can borrow.

Clear the cards each month

We also tend to underestimate the true cost of something paid for on credit. It’s no small task to get this right because of the interest and fees charged (although our debt calculator can help).

To avoid interest costs as we use those convenient cards, the way to go is to simply pay off the entire balance at the end of each month. It’s a great habit to get into.

Making just the minimum payment may make us feel like we’re not in debt, but of course we certainly are. If you find yourself consistently spending more than you intended, you can always switch to using ‘real money’ with a debit card or cold cash even.

Join KiwiSaver

Although not for absolutely everyone, these days you need a really good reason not to be in KiwiSaver. It’s become a really important part of the way Kiwis prepare for retirement.

What tips the balance so much in its favour are the contributions from the government and employers, which help boost our own individual savings. You can use KiwiSaver for a first home deposit, too.

Basically, anyone not in KiwiSaver is leaving free money on the table. Check out the new KiwiSaver fund finder for help comparing all the funds out there.

Choose wisely where you live, what you drive

It certainly doesn’t take very long to finance a car, and signing a mortgage doesn’t take that long either. These choices, however, have long-term effects on our finances. Because we tend to borrow as much as we can – and lenders can be quite ‘generous’ with their offers – it’s not hard to wind up with an overextended budget that’s stressed.

While at home we’ve been able to reduce our housing expenses hugely for the moment, recently we’ve been marvelling at how much we end up spending on transportation each month. Housing and transportation take the biggest bite out of budgets, and choosing not to stretch too far could mean that you have thousands freed up to instead to spend on the things that make you happy.

Buy a house – with as big a deposit as possible, and aim to pay it off fast

I used to think that buying a house was just that, wondering if it was worth all the expense and the hassle. These days I’ve discovered that it’s much more than just owning the roof over our heads; it’s a decision that can make a huge difference to our financial position and our situation when we retire. Admittedly, it’s gotten harder to do this though.

The larger the deposit the better. Even though this means that it becomes all that harder to save one, it also means that tens of thousands can be saved on interest. Paying it off faster than the full term is another choice that also avoids a lot of mortgage interest. Sorted’s mortgage repayment calculator can show you how much.

Keep investing in yourself

Here at Sorted we often look at investing and how to make your money work for you. Usually it’s investment in assets like shares, property or bonds that can increase in value. Yet there is another sort of capital we can grow as well – human capital – by investing in ourselves.

We can do this by investing money in our continuing education, our career, our networks. For the entrepreneurs and the self-employed out there, this might mean your own business, or it might mean increasing your business savvy.

So the choices we make in any of the above categories can have a much greater impact on our finances than just counting everyday costs. This is big-picture thinking; what you see when you pan out a bit. Have a look at our net worth calculator to see which choices will matter most in the long run.

 

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