"For those with a mortgage, the way it's set up matters most - even more than the interest rate.
"Don't freak out about rising rates: no one can control interest rates going up - but what they can control is their personal financial situation."
Brad Yates, business owner, NZHL (New Zealand Home Loans).
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make.
Economists widely expect the wholesale cash rate, held at 0.25 percent for the last 18 months, to start rising from the Reserve Bank's next scheduled review on October 6. Ahead of the announcement, mortgage rates have nudged higher, ANZ standard 2-year and 3-year fixed rates rising to 3.85 percent and 4.09 percent on Friday.
As rate rises can't be controlled, Brad Yates, the owner of a NZHL franchise in Mandeville Street, Christchurch, says it's important borrowers don't "freak out". He suggests concerned borrowers revisit their budget and get help with structuring their loan so it supports their goals.
As a saver, Yates doesn't mind spending money - as long as it's not wasted. Although there are ways to cut back, it's often easier to earn more than save more, he says.
For those who put their mind to it, there are ways to make more money.
1. Are you a saver or a spender?
A saver. I like to know where every dollar comes and goes - but we've also got to have a life!
For us, that's about making planned purchases, weighing up the pros and cons on the big stuff and managing everyday expenses. In our house, we have a saying: 'we don’t mind spending it, but we’re not going to waste it'.
2. What's been your biggest financial lesson, success or failure?
Sometimes it’s tough to make ends meet. We've had our fair share of trying to figure out how to pay the bills at the end of the month.
One of our biggest financial and personal successes came when we could assist my parents into a property. This fulfilled a goal for us and them, and felt really special.
People who know what their goals are and why they're working hard will naturally see more opportunities and find a way to make things happen.
3. What do you know about money now that you wish you'd known sooner?
That it's easier to earn more than just save more.
I'm big on saving. But there's only so much annual income people can save unless they increase their earning potential.
For those who put their mind to it, I believe there's many opportunities to earn more money. We all have ideas that could potentially make us thousands of dollars, but the average person doesn’t act on them.
It could be a side hustle, an investment or a second job. The economy is screaming out for labour at the moment. That extra cash could be ring-fenced for greater financial good.
4. What's your key message for mortgage borrowers in the current environment?
To make sure they've got their financial house in order.
We've experienced record low-interest rates for some time now, and economists are saying there's only one way for rates to go. This will cost Kiwis more.
I suggest mapping out earnings and spending then setting a budget, ideally with a surplus and savings incorporated.
If saving money isn't realistic, take out the scissors and start trimming. There's usually somewhere people can cut back their spending or do things smarter.
One of the things I think is important is that people ask themselves what they're going to be doing in 12 months time - and longer. For example, for those who plan to sell, choosing a 5-year fixed rate is unlikely to be the best decision.
As every person's situation is different, I suggest borrowers talk to a financial adviser, mortgage or home loan specialist about optimising their mortgage structure.
5. What's your preferred form of investment and why?
I personally take a diversified approach: property and more recently, shares.
I've built that carefully over time and researched and taken advice where needed.
Kiwisaver is also a no brainer: it's free money from the Government and most employers also contribute.
6. What's your best saving tip?
For those with a mortgage, in my view, the way it's set up matters most - even more than the interest rate.
Don't freak out about rising rates: no one can control interest rates going up - but what they can control is their personal financial situation.
7. The best money advice someone's ever given you?
To focus on income opportunities - on top of not wasting cash.
The views expressed in this article are personal and are not professional financial advice.
