Financial Planning Lessons for the Christmas Holiday Season – and Retirement

Big Santa Claus is at Havelock New World, and the Christmas tree sculptures have been affixed to the fountains in Hastings – a sure sign of the upcoming merry festive season.

It can not be
away until we hear the regular tunes… Snoopy & The Red Baron are already hiding somewhere, I just know.

Whether you’ve looked at the encroaching baubles and tinsel with enthusiasm or disdain, you’ll be aware of the ever-tightening gap between now and Christmas Day (and if you’re celebrating with children, you’ll no doubt be doubly aware ). What was once a hazy idea of ​​public holidays and welcoming the whānau is now just weeks away. Are you ready for this?

We have developed a little routine to prepare for the holidays in our house. This partly prevents the kids from setting up the tree too soon…and causes them to think strategically about their income, because their out-of-pocket expenses are going to explode over the summer.

We also make sure we have certain things well in advance. I’ve already bought the meat for our Christmas party, thanks to a few recent sales – and acquired some wine to share three months in advance at auction. The extra time can allow you a little more freedom on pricing because you’re not caught in the rush when items are in high demand.

For my part, I like to start thinking about refining my New Year’s goals as the time draws closer. I also keep track of how many days of work I have left to make sure I end the work year on a positive and productive note.

Any preparation you can manage to take the stress out of the big day – using all the help you have in the kitchen, putting money aside early or buying presents throughout the year, and setting expectations throughout the day – can really help keep blood pressure even. Keel.

We can think of retirement planning as a similar concept on a larger scale. It comes faster than you think, whether you are ready or not. And the longer you leave it, the more stressful it becomes – and the more lump sum money you’ll need to cover associated costs.

In order to prepare effectively, it is important to first consider how much money you will need each year during your retirement. There are several approaches to determining this amount, but ultimately how much you think you can afford in retirement is a personal choice.

For a quick approach, experts estimate that you’ll likely need 80% of your pre-retirement income if you want to maintain a similar but more modest standard of living in retirement. Of course, you also have to take inflation into account – even outside of today’s runaway inflation levels, it’s inevitable that inflation will slowly rise over time. $100 today won’t buy $100 worth of goods in the future.

You also need to determine where your income will come from during your retirement. We are already seeing the cost of living exceed the New Zealand Superannuation, and the situation is unlikely to improve over time.

KiwiSaver is a great tool for padding your retirement, especially if you’re contributing above the minimum – it’s only a small hole in your pocket now to contribute more than 3%, but it will add up over time for a richer potential reward. . You also need to make sure you’re in the right fund for your life stage and goals – it can make all the difference!

If you are a disciplined saver and already have a reserve, consider investing as a way to hedge against inflation. While it’s good to have accessible savings in case of bad weather, the compound interest you get by leaving your money in the bank won’t exceed inflation (or account fees) over time. A diversified global investment portfolio can help you grow your money, and again, this can be created with your values, goals, and timeline in mind. The earlier you start, the better.

The key here is consistency and patience – kind of like making a Christmas fruitcake from scratch. Feed it a little, often, over time, and it will be much richer in flavor than something cooked the day before.

If you haven’t started thinking about your financial future and retirement yet, now is the time. Making a solid financial plan is essential to living a comfortable life once you stop making money. Talking to a trusted financial advisor can be a great first step…and it’s much easier to find them to chat than the big man in red.