Online tutorial

Our free online tutorial is the first step to making smarter spending decisions. So, what are you waiting for?

Sometimes keeping on top of all the things you are supposed to understand with money can feel a bit overwhelming. It can be hard to know where to start and which way to turn. 

Let our online tutorial guide you through the maze of money management. Everyday, money decisions will seem a lot less complicated.

It'll take approximately 30 minutes to complete.

Tutorial

  • tabletThis tutorial is designed to give you an understanding and awareness of basic money matters to help you manage your own money. 

    Once you've completed this tutorial, you can expect to:

    • be aware of and understand options around basic money matters; and
    • make smarter decisions around your money. 
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    One of the best ways to manage your money properly is to understand where it actually goes. When you start your financial planning, the two areas that you should look at are budgeting and saving.

  • Before you create a budget, it's helpful to know what you spend your money on. What's the best way of understanding this?

    • Start a spending diary by jotting down in a notebook what you spend in a month
    • Look at your last month's bank statement and write down what each item was for
    • Either of the above
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  • Once you know what you spend your money on, the next step is working out how much you can save, by setting up a monthly budget.  Here's a sample template.

    mym budget calculatorsYour budget is made up of three parts, first your income; this is how much month you have coming in.

    Use your spending diary to help you fill out the second part, your expenses. Expenses are what you spend your money on. This table helps you convert weekly, fortnightly, monthly and yearly expenses.

    When your expenses are subtracted from your income, you'll know what you have left. 

  • Think about what you would like to save for - setting yourself a savings goal could help you keep on track. It's a good idea to think about short-term, medium-term and long-term savings.

    Here are some examples:

    Short Term (0-2 years)

    • Car repairs
    • Medical emergencies
    • A weekend getaway

    Medium Term (2-7 years)

    • Deposit for a property
    • Overseas holiday
    • A car

    Long Term (7 years +)

    • Paying off mortgage
    • Saving for superannuation
    • Saving for KiwiSaver
  • Which of these is an example of a medium term goal?

    • Superannuation
    • Weekend getaway
    • Overseas holiday
    • A house
    • A birthday dinner out
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    • Don't spend more than you earnmoney bag
    • Obiligations (things you must pay on time like loans, fines, child support, insurance) must be allocated before you allocate spending money
    • Set realistic and achievable goals
    • Start saving small amounts and each success will give you confidence
    • Don't be afraid to share your budget with family and friends, as they can help you stay on track and learn along the way. 
  • There are many ways of paying for things. We'll look at some of the advantages and disadvantages for some of the key payment methods.

    Debit Card

    A debit card is a card that you can use to access the funds in your bank account to pay for transactions over the counter, over the phone or online.

    Some advantages are:

    • can purchase just about anything, anywhere, anytime
    • can be used to make online payments - often needed when making online bookings
    • don't have to carry cash
    • if your card is stolen and used fraudulently you could be covered by your providers' card liability policy
    • can withdraw cash at retailers or ATMs when needed.

    Some disadvantages are:

    • rewards schemes are not linked to debit cards
    • your transaction would decline if you spend more than what you have available in your account and in some circumstances you could go into unarranged overdraft and incur fees. 
  • A credit card is a card that can be used to get cash or pay for goods or services up to an agreed credit limit. You can pay off the balance in full each month or choose to make a partial payment based on the outstanding balance (in which case you will incur interest).

    Some advantages are:

    • can purchase just about anything, anywhere, anytime - including online
    • could earn rewards with everyday spend if the card is linked to a rewards scheme
    • if your card is stolen and used fraudently you could be covered by your providers' card liability policy
    • don't have to carry cash
    • if you don't have the money available at the time of purchase you could use credit - with up to 55 days interest free
    • widely accepted - often preferred or needed for bookings
    • balance transfer and purchase rate offers often give you access to interest free credit for a period

    Some disadvantages are:

    • generally pay high interest rates (if not paid off in full every month)
    • can trap unwary or impulse spenders into spending too much
    • widely targeted for theft and fraud
  • A Contactless Payment Sticker is a mini-card which can be stuck to the back of any mobile device and is linked to your credit or debit card.  You can use this card to make contactless transactions of up to $80 without the use of a PIN.

    Some advantages are:

    • quick and easy way to pay
    • transactions are more secure due to your Contactless Payment Sticker never leaving your hand when making a purchase
    • can be used as a backup in the case of forgetting or losing your wallet
    • Contactless Payment Stickers are protected by the same policies covering your credit or debit card

    Some disadvantages are:

    • cannot be used for purchases exceeding $80
    • can be used at contactless enabled terminals
  • An EFTPOS (Electronic Funds Transfer at Point of Sale) card is a card that you can use to access the funds in your bank account to pay for transactions over the counter.

    Some advantages are:

    • good in emergencies if you have no cash and are generally accepted everywhere in New Zealand
    • can use it to withdraw cash at some retailers and at ATMs
    • don't have to carry cash

    Some disadvantages are:

    • your transaction would decline if you spend more than what you have available in your account and in some circumstances you could go into unarranged overdraft and incur fees
    • can allow thieves access to money in cases of fraud or theft (if a PIN is compromised)
  • Cash is physical currency that can be used over the counter to pay for goods and services.

    Some advantages are:

    • cash is accepted everywhere
    • you can sometimes negotiate a lesser price for cash payments

    Some disadvantages are:

    • can't earn interest on cash
    • if you lose cash, it is not covered by the bank's card liability policy
  • Automatic payments allow you to set up a payment for a specific amount on a regular date to pay regular fixed expenses such as rent.

    Direct debit payments are similar, but are designed for bills that vary each month such as power or telephone.

    Some advantages are:

    • payments are always made on time, if set up correctly
    • paying on time sometimes entitles you to a discount

    Some disadvantages are:

    • not everyone accepts automatic payments or direct debits
    • if you don't have enough money in your account when the automatic payment or direct debit is due, the payment won't be made and you will be charged fees
  • Other types of payments include the following:

    Cheques

    A cheque is a written request to pay a specific amount of money from your bank account to the person in whose name the cheque has been issued.

    Overdrafts

    An overdraft is a facility that banks could offer you, which allows you to spend up to an agreed amount over the amount you have in your bank account.

    Hire Purchase

    Hire purchase is a medium-term form of finance where you agree to pay for goods on an instalment basis.  You own the goods only when they have been fully paid for.

    Store Cards

    A store card is a transaction card associated with a shop/store, which can be used only for paying for things from that shop/store.

  • Sarah has had her credit card for over two years. The bank has recently offered to increase her credit limit by 30%. Choose the most appropriate action that you think Sarah should take.

    • Sarah should take the opportunity to increase her limit as she could have greater purchasing power and have access to a larger financial buffer in case of an emergency.
    • Sarah should think carefully and consider whether she needs an increase on her current limit – will it encourage her to spend outside her means?
    • Sarah should negotiate for a higher increase – she has been a customer for over two years.
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    • It's always your money you're spending, even if it doesn't feel like it. Credit and hire purchases for example have to be paid back.
    • Interest rates on credit cards are often high.
    • Don't automatically accept offers to increase your credit card limit.
    • If you get into debt and are struggling, call the bank or credit card company to talk about a solution.
    • Check your statement each month, mistakes can be made.
    • Don't give your PIN to anyone.
    • Don't write your PIN down - find a way of remembering it.
    • Don't let shop assistants or cashiers take your card away from your sight for security reasons.
  • People who are clever with their money tend to understand the value of their money. They understand that even small amounts can make a difference to their long-term wealth.

    atmThere are two strategies that you can apply to kick start your money management, they are:

    • develop good spending and saving habits
    • develop your own money management plans.
  • With a job, you have access to money on a regular basis. This can lead to the temptation to spend it all before the next pay day. It is important to develop good spending and savings habits early. 

    • Savings is money put aside after all other fixed expenses have been sorted
    • Try to keep savings separate from spending money
    • Try not to touch savings unless absolutely necessary (e.g. medical emergency)
    • Remember paying off debt is a form of saving.
  • There are different ways of managing money. Here are some strategies that you could use. 

    • Delay spending; ask yourself 'do I really need it?' and if that doesn't work, then wait a few days to see if the urge to spend goes away.
    • Recognise the difference between needs and wants. Ask yourself what are the consequences if I buy this item? Who else is impacted by this purchase? Where else could this money be spent?
    • Make the most of compound interest - this is basically earning interest on the interest previously earned on your savings.
    • Understand the 'Leak Factor' - a slow leak in your finances, where small but regular spending gradually wears away substantial amounts of your money, without you even realising it (eg. coffee or magazines).
  • Understanding the difference between ‘wants’ and ‘needs’ helps you figure out what you could live without which can help with your savings plan. What’s an example of a ‘want’?

    • Home cooked meal
    • Electricity
    • Public transport to work
    • Rent
    • Purchased cup of coffee
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  • Earning compound interest means

    • Earning interest as a yearly lump sum instead of monthly
    • Earning bonus interest on top of the regular interest from your bank when you regularly put money in your savings account
    • Earning interest on the interest previously earned on your savings
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  • KiwiSaver has been set up by the Government to help New Zealanders save for their retirement. It has lots of benefits that can make it easier to save and even help boost your savings along the way.

    As long as you are under 65 and a New Zealand citizen, or entitled to live here permanently, you'll most likely be eligible to join.

    There are even more reasons that make KiwiSaver a great way to save for retirement. If you're eligible:

    • the Government will contribute 50 cents for every dollar you contribute up to a maximum of $521.43 each year (this is called a member tax credit);
    • and make regular contributions equal to at least 3% of your gross salary, in most cases, your employer will also need to make regular contributions equal to 3% of your gross salary;
    • you may be able to withdraw your savings to help you buy your first home; and
    • you may also be entitled to a KiwiSaver HomeStart Grant to help you buy or build your first home.

    Some disadvantages are:

    • while the investments held in your KiwiSaver account generally appreciate over time, their values can fall; and
    • KiwiSaver is designed to help you save for retirement. So in most cases your money is locked in until you reach the age when you qualify for NZ Superannuation (currently 65 years).

    Please note conditions and eligibility criteria apply to these KiwiSaver savings incentives, and they may change in the future. Generally, up-to-date details are available at www.kiwisaver.govt.nz.

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    Here's what we've talked about!

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    Once you’ve decided to join KiwiSaver, you will need to decide how your savings are invested.

  • KiwiSaver is a long-term savings initiative with special features designed to help boost your savings. It is open to:

    • All New Zealand employees aged up to 65
    • Most New Zealand citizens and people entitled to live here permanently who are under age 65
    • All New Zealand employees and employers aged up to 65
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  • Insurance can give you added protection when the unexpected happens. Remember that ACC doesn't cover illnesses which may keep you off work for a period of time.

    insurance umbrellaDepending on your circumstances, you may want to consider:

    • life insurance
    • income protection insurance
    • home and contents insurance
    • car insurance
    • health insurance
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    Here’s a basic overview of the three main types of asset insurance.

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    Find out more about the three main types of personal insurance.

  • Why might you consider taking out life insurance?

    • So that should you no longer earn the income you’re accustomed to, you can continue to receive a portion of your previous salary to help protect that lifestyle until you’re able to return to work.
    • So your belongings can be replaced in case of theft.
    • So that you have the most comprehensive cover if your car is damaged, whether it is your fault or someone else’s.
    • So that should the worst happen, this could help your family repay outstanding debt like your home loan and other expenses such as funeral costs.
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  • We all make poor decisions from time to time. Making good decisions depends on having good information and a real understanding of possible consequences.

    Money and emotions

    Money, or more usually the things it buys, has the ability to make people very emotional. Here are some ways that may help you to prevent or limit becoming an emotionally-driven spender:

    • setting limits before you are put in a vulnerable spending situation
    • limiting access to funds
    • getting opinions from family or friends
    • delaying the decision to spend until you can weigh up all the factors.

    Job security

    The job market has changed dramatically from our parents' time. Most people can now expect to have a number of jobs in their lifetime and even several careers. 

    How would you cope if you became unemployed?

    Consider:

    • savings - e.g. having an emergency fund with enough money to cover at least three months’ worth of your expenses
    • insurance - e.g. income protection or personal accident and illness cover.
  • help

    The decisions you make daily about your finances may have to change direction completely one day. If you find yourself in difficulty with your money and you are unable to meet your interest and/or debt payments you should contact your bank or lender and let them know. Some banks may negotiate a repayment plan with you rather than have you default entirely.

     

  • The key messages of this tutorial are:

    • have a spending plan and a budget
    • save regularly towards short, medium and long term goals
    • understanding the advantages and disadvantages of each payment method could help you choose the most appropriate way to pay for items that will minimise your risk, earn you the most rewards or incur the smallest cost
    • KiwiSaver has been set up by the Government to help New Zealanders save for their retirement.  It has lots of benefits that may make it easier to save such as regular employer contributions and Government member tax credits if you are eligible.You may also be able to use your KiwiSaver savings to help buy your first home
    • develop healthy spending habits
    • make your own decisions and be prepared to accept responsibility for them.

    Need more help on topics covered in this tutorial? Head back to the Managing your Money section or register now for the face-to-face Managing Your Money workshop.

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