The current situation has highlighted the importance of keeping our finances top-of-mind. As we’ve recently seen, things can change fast and unexpectedly, so it’s crucial to prepare for the curveballs that may come our way – and take advantage of any available help when needed.
Here are some tips from our SHARE advisers, to help you get through these financial challenges and create resilience for the future.
Protect your financial plans
Personal Insurance is designed to take care of you and your loved ones’ financial future, and as you know, each type of cover provides unique aspects of protection. Now can be a good time to review your overall insurance plan and how it meets your needs.
Is your insurance still aligned with your life? Are you considering expanding your cover, replacing an existing policy with a different one, or cancelling your insurance altogether due to affordability concerns?
Please get in touch with your SHARE adviser. We can help you understand if your cover needs adjusting. Plus, if you’re thinking of taking out a new policy or you’re concerned about the affordability of your existing ones, we can talk you through your options in detail.
Due to the recent situation, some insurance providers have been updating the wording on their new policies, so by giving up the protection you currently have in place, you may be missing out on some key benefits down the line. Depending on your circumstances, your insurance provider may be able to offer you some financial respite while keeping your policy up and running.
Secure your family’s house
Your family’s home is one of your most important assets, so once again, protecting it is crucial. As you know, certain types of insurances – like Income Protection, Trauma Cover and Life Insurance – are designed to safeguard your ability to repay the mortgage should you suffer a serious injury, illness or worse. However, in the current situation, you may have seen your income drop significantly. Or you may have lost your job, and have no redundancy cover to back you up.
Once again, if your finances have been affected and you have concerns about your mortgage affordability, please don’t hesitate to contact us. Our SHARE advisers can help you understand what type of assistance is available through your lender, and how it may impact your mortgage in the long term. Whether it’s switching to interest-only, opting for a repayment deferral or extending your loan term, there might be help coming your way.
Strengthen your financial position
These times are showing many of us that we can slow down and be more intentional in how we live. So why not channel this awareness into long-term financial habits?
- Build a rainy-day fund. In parallel with your insurance, your emergency fund can provide an additional ‘safety net’ against the unexpected. If your budget allows it, putting aside some money on a regular basis is usually a good idea.
- Focus on repaying your debt. You may not be able to repay your debts faster right now, but as soon as your finances allow it, please consider the benefits of getting debt-free. Living debt-free is about creating financial resilience and positioning yourself to weather the next storm.
- Create a realistic budget. During the Level 4 lockdown, with purchases limited to the bare minimum, you may have started putting ‘needs’ and ‘wants’ into a completely new perspective. What did you miss? Was there anything you had been taking for granted? Or something you’ve realised you can do without? Use this awareness to guide your budgeting going forward.
Diversify your investments
Following the recent sharemarket downturn, you may have experienced a drop in your investment returns. While diversification does not remove the possibility of negative returns, it’s about reducing their volatility.
Generally speaking, individual investors (or fund managers) that diversify across many sectors and companies are less likely to be vulnerable to markets’ fluctuations.
If you need help diversifying your investment portfolio, or would like to find a managed investment fund that invests across a range of asset classes, please get in touch. Our SHARE advisers are here to talk you through your options, needs and goals.
And the same, of course, applies to KiwiSaver: if you belong to KiwiSaver, and would like to make sure that your fund is appropriate for your goals, investment horizon and attitude to risk, our SHARE advisers can help you.
Understand what help is available
It’s important to remember that we’re all in this together. The New Zealand Government, as well as KiwiSaver providers, insurance providers and mortgage lenders, are taking unprecedented steps to support Kiwis financially in these uncertain times.
Please don’t hesitate to contact your SHARE adviser if you’d like to learn more about the assistance options that may be available through your insurance provider or lender. Each solution comes with pros and cons, so it’s important to understand the detail.
And on this note, if you’re considering making a financial hardship withdrawal from your KiwiSaver fund, the Commission for Financial Capability has recently warned New Zealanders to use this option only as a ‘last resort’. While financial hardship withdrawals can certainly help in times of need, they can also negatively affect your long-term retirement goals. Please don’t hesitate to discuss the implications with a SHARE investment adviser.
Please visit covid19.govt.nz to learn more about Covid-19 wage subsidies, and any other support initiatives that may be available to you. And of course, let us know if you have any questions at all.
Disclaimer: Please note that the content provided in these articles is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your specific situation. Before making any decisions based on the information provided in these articles, please use your discretion and seek independent advice from your SHARE Financial Adviser.