Part of being financially capable is being financially resilient
Financial reslience means people can weather life’s storms, or unexpected financial hits, without falling into damaging debt.
We recommend three key areas in which New Zealanders can build their financial resilience:
Emergency funds
If people don’t have some savings, they tend to borrow at high interest rates to quickly pay for unexpected bills, and that affects their long-term finances.
Having a buffer savings account makes a big difference to financial resilience, and people’s sense of financial wellbeing – New Zealanders report feeling less stressed about money if they have an emergency savings account. They sleep better knowing they can deal with unexpected events.
Insurance
When something bad happens, New Zealanders should be looking after their people and their wellbeing, not be stressed about how much money they're going to need to repair the damage. Let insurers do the heavy lifting financially.
Consider what kind of loss would hurt you financially, what you could absorb and what would be better covered by an insurance company.
Find policies that cover what’s most important to you – the people in your life, your money, and your stuff.
Rather than carry big risks on your own, having an insurance company do it for you can bring peace of mind.
Wills and enduring powers of attorney
A will is an act of love made in advance – in writing one, you are providing for and protecting your loved ones after you’re gone, including their financial wellbeing.
Your will doesn’t just cover your money and possessions, but everything you care about: who will raise your children, care for your pets, how you want your funeral to be run and where you want your final resting place to be.
By appointing someone you trust to have enduring power of attorney on your behalf, you are ensuring your wishes will be carried out.
The increase in the number of blended families has made wills even more important, as couples must consider not only their children and current partner, but also their stepchildren and former partners.
If you die without a will, it can create conflict within your extended family, and your partner’s extended family. The law gets involved and things can end up very differently to how you might like.
Once you have a will, check every few years that it’s still relevant – is there a new partner or children on the scene? Have you changed your mind about whom you want to care for your children, or whom you want to leave stuff to? Have you acquired something new that’s valuable and you want to include in your will?
Ultimately, in our last moments, we want our thoughts to be peaceful, happy and reflective, and to feel secure that our will has everything sorted for the people we’re leaving behind.
Sorted's blog
These quick reads give a fresh take on making the best money decisions for you.