HOT TOPICS:   Election 2014  |    Fonterra   |  Home loans                                      RESOURCES:    Economic calendar   |  Credit rating explained

Live, learn and grow; How much do you need to save for retirement; Losing money while you sleep; Automatic savings; Median rents

Posted in Personal Finance

By Amanda Morrall (email)

1) Educate yourself

I have a repertoire of mantras that I draw on in both good and bad times. One of them is "If you lose don't lose the lesson.'' I borrowed it from the Dalai Lama. I have found it to be quite profound and apply it often. It makes disappointment and frustrations a lot easier to take. I have come to believe there is always something to be gained, even from the ugliest of situations if you open your mind and eyes to it.

Personal finance blogger squirrelers.com shares that view and suggests that adopting this attitude across all facets of life, experiences and relationships will also add to your bottom line if you take the lessons on board and apply them.

2) How much do you need?

Is 2% of your gross salary going to cut it for your retirement savings? Maybe if you live like a monk in retirement. I like learning from monks but I don't want to live like one. How much you need will depend on a whole range of factors including when you started saving, how much you are setting aside, your returns, tax, inflation, fees, and lifestyle in retirement. This blog by sensetosave.com reviews some of the basics. Substitute 401s for KiwiSaver.

See also our Kiwi-friendly cost benefit calculator here for more retirement savings guidance.

3) Losing money while you sleep

Apparently I was sleeping a lot last year. Global equities sucked the life out of my kid's university education funds.  Here's some sobering advice for investors with individual stocks in their portfolio basket via reuters.com.

4) Automatic savings

Pay yourself first. It's a standard line uttered by financial advisors to get clients into a savings mode. One of the most practical ways to achieve that is by having the money come out of your paycheque before you get a chance to spend it. Novelinvestor.com extols the virtues of automatic savings here.

5) Median rents

Our median rents chart here pains me every time I see it. Why? Because even though I live in a modest three bedroom home, and not a mansion, my proximity to the beach means I've crossed the median. Nationally it's NZ$320 per week. Auckland's fell from a peak of NZ$510 last November to NZ$495 in January. I look longingly at the median but fear another move might just kill me. Life is a series of trade-offs. Fortunately, I love the beach and go there most days.

To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter@amandamorrall

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

1 Comments

It's ok to make mistakes, as

It's ok to make mistakes, as long as you learn from them.  Is something I find myself saying more often then I would like. 
 
2% which becomes 4%+ net of govt and employer contributions isn't going to get you very far.  <25 years work, to equal 1 year of not working.  Thats going to fine for a bit of walking around money.  If thats all you have though, it's the monk lifestyle for sure.  You want to at least own your own home, and have some other form of income, whether passive or earned.  I know some >65 year olds who still do some part time work, so they can go away for a holiday etc.  I wouldn't expect much to come from taxpayers.  Sure hope for the best, but expect the worst, and take whatever comes.  Plan for bad times and you will know only good.  Having a couple of good years won't make you, but a couple of bad years will. 
 
As Kiyosaki pointed out, it's impossible to pay yourself first if you work for wages.  The govt gets paid first.  So many tax advantages to having your own business, personally I think it's so wrong, but there it is.  Setting up a business is the best way to be able to pay yourself first.  Use it to buy your own home, then you can rent the home from the business, and all repairs and improvements, rates, insurance etc are paid for in pre tax dollars.  You could do this Amanda, and then you could feel slightly better about paying above median rent.  That is if you could balance out the evils of borrowing, against the good of your own future.