Sheryl Sutherland points out saving isn't as easy as it sounds. But once you find processes that work for you, it can transform what you can enjoy in the future

By Sheryl Sutherland*

The wonderful people at this website assist me in my writing by giving me topics they think will be of interest to readers.  They suggested ‘saving’. 

I rolled my eyes, bored, and agreed deferentially. The problem as I see it is ‘saving’ is not a concept that we are unfamiliar with.  Check out sorted.org.nz or mindfulmoney.nz to calculate and read to your heart’s content.  You know (assuming you are earning a reasonable wage) to create an emergency fund, get your KiwiSaver sorted, tackle debt, insure your assets and earnings, set goals and plan for your retirement – six simple steps.

Sadly, in New Zealand today, many cannot even get to save a fund for an unexpected expense, let alone move on the steps two to six. 

If you are in the lucky group who can squeeze a few dollars into savings, what is stopping you?  You’ve read all the articles, watched the talk shows, heard your peers discussing it, but have never managed it.  It’s not lack of knowledge or access to assistance to gain a degree of financial literacy that is stopping you - it’s your attitude.  Sure, you mean to get on to it, but just can’t seem to.  The problem is one that we rarely discuss – the momentum we need to get us going, the nudge. 

In fact, a book has been written about this called “Nudge”, (surprisingly) subtitled “Improving Decisions About Health, Wealth and Happiness”.  The authors take the premise that we are all susceptible to biases that can cause us to blunder into making bad decisions about (among other things) personal finances, mortgages, credit cards and so on.

They further suggest that we need ‘choice architecture’ to nudge us in the right direction.  Here in New Zealand, we are fortunate that we are nudged towards KiwiSaver by government legislation; but there is nothing nudging us to save in any other aspects of our financial lives.  We all have inertia when it comes to financial planning – it’s boring, there is never enough money no matter how much you earn, and we need to deal with our biases, all of which we have acquired unknowingly.

I could write a book about our attitudes to money and our unidentified biases – oh wait, I have!  Sex and food are the most discussed topics in relationships and life.  The most emotionally charged topic, and the most important, is money.  Yet it is the most neglected.  I’m not talking about “I’m broke”, “I can’t afford…(fill in the gaps)”, I’m talking about how much we earn, how much we own, how much our parents earn or own, what our friends financial lives look like.

The first thing ...

The first thing you need to do before you start on saving is not so simple; identify your feelings and biases around money.  We all have different beliefs – are you a hoarder or a spender, a worrier or an avoider?  If you can’t figure it out, try and isolate your money messages; these are the messages you have internalised from your parents, peers and the media.  As Jess McGawley said “Parents are good at preparing the money for the person; they are less good at preparing the person for the money”. 

Examine your money messages by considering questions such as:

• How did your parents discuss money – openly, calmly and rationally, in anger or behind closed doors?
• What did your education in money consist of?
• What are your money taboos?
• In conversations, do you refer to money negatively?
• Do you see money as controlling you?

Talk to some outside observers.  How do they see your relationship with money?  Try a view from say your parents, your friends, or your siblings – they will definitely have an opinion.  Good luck!

Controlling and being aware of your attitudes and biases are the keys to a great financial life.  Consider the following questions – there are no right or wrong answers, it’s just food for thought.            

1. Do you spend more money on your friends than you can afford?
2. Do you find yourself buying more presents for others, or spending more on birthdays and on holidays than feels right to you?
3. Will you spend money on others but rarely on yourself?
4. Have you ever bought something, then decided when you got home that it really didn’t suit you, but neglected to return it to the store in time to get your money back?
5. Do you give to charities to impress people, rather than because you really believe in their cause?
6. Have you sometimes “forgotten” to pay off personal loans from friends with the same regularity that you’d pay off a credit card?
7. Do you often buy/go out to dinner simply because you don’t feel like cooking?
8. Have you sometimes paid your bills late when you didn’t have to?

If you find that the answer to many of these questions is yes, you need to learn to be more respectful of your money.

Try to keep a notebook in which you record all your financial activities, how you feel about each transaction, and why you made the decision you did. The first step to controlling your money is knowing exactly where it’s going and why.

Or, try this one simple thing – give yourself a cash allowance, no cards at all.  When it’s all gone that’s it!  Don’t think of this as odd, according to the RBNZ director of money and cash Kiwis are carrying more cash now than ever before with around $8.9 billion in circulation, up from $7.9 billion in 2021. Not quite a major shift to digital just yet.

*Sheryl Sutherland is director of The Financial Strategies Group, and author of Girls Just Want to Have Fund$ – Every Women’s Guide to Financial Independence, Money, Money, Money Ain’t it Funny – How to Wire your Brain for Wealth, and co-author of Smart Money – How to structure your New Zealand business or investments and pay less tax. You can contact her here.