Are you making the most out of your Kiwisaver?
Saving money can be an absolute mission. After giving up costs like coffee in the morning or dinner on a Friday night, and saving for months or years, you may not even feel like you're getting anywhere.
It doesn't have to be that way though! Kiwisaver is a brilliant way to make saving easy – and most importantly – successful. If you're not signed up, you're literally missing out on awesome free money that over 2.5 million New Zealanders enrolled in Kiwisaver are receiving.
Let's look a little closer.
How does it all work?
When things seem too good to be true they almost always are. Kiwisaver is one of those rare instances where that old saying doesn't apply.
If you contribute just over $1000 a year to your fund, the government will help you out with a further payment of around $521. On top of that, your employee must legally contribute 3 per cent of your salary.
If you're earning $45,800 per year, which Careers NZ states is the median income in New Zealand, you'll be getting over $5,500 a year!
Is a default scheme right for you?
There's nothing wrong with the default Kiwisaver schemes, but there are better options available if you're serious about saving. According to a 2015 Financial Market Authority, the average Kiwisaver balance is over $11,000 – that's a lot of money to trust to just any fund.
The average Kiwisaver balance is over $11,000 – that's a lot of money to trust to just any fund.
Before committing to the first scheme that you're presented with, take some time to think about what the best option for you is. All funds are not created equal. There are some that will perfectly suit you and your financial situation, and others that will only make it more difficult to reach your goals.
For help getting your hard earned (and free) money into the perfect fund for you, let the team at Goodlife Financial Advice lend a hand. After helping thousands make the most out of their Kiwisavers, we know a thing or two about what works and what doesn't.
Set your family up
When it comes to saving, starting early is always better, so set your family up with the right Kiwisaver and safeguard their financial futures. As an example of how effective an early start with the right fund could be, let's look at how quickly contributions can stack up even if you're earning minimum wage.
That's around $32,000 a year, assuming you're working a 40 hour week and taking all your annual leave. If you started at 20, made 8 per cent contributions and received the bonus from the government every year, you'd have at least $40,000 by the time you were 30.
$40,000 is a massive chunk of money that could cover the deposit on a home, or even a residential investment property.
Buy your first home
When it does come time to buy your first home you'll be very happy that you enrolled in Kiwisaver. Not only will you have a nice chunk of money to cover (or help with) your deposit, but if you plan to live in the property you could be eligible for a fairly hefty Homestart Grant.
Yup, more free money. If you're purchasing a new build this could be up to $10,000 or $20,000 provided you're buying the property with another person who is also eligible.
You'll thank yourself later if you take the time to set up your Kiwisaver and get the right advice on choosing a fund. It could mean buying your first home years earlier, or even a more comfortable retirement down the track.
Here's to your financial independence!
Authorised Financial Adviser / Investment Property Expert
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