Five tools that will help you get your finances sorted

Wednesday, 24 April 2019

Here's how to get on top of your mortgage.

You don't need to buy pricey apps or sign up for expensive courses to get your personal finances sorted.

There is an increasing range of tools, calculators and planners available online to help organise everything from your KiwiSaver to your credit card.

Here are five of the most useful.

1) GET STARTED

Sorted offers a budgeting tool that steps you through the process of working out what's coming in and what you can afford to have going out each month.

* The KiwiSaver provider which wants to help you track your consumer spending

* Sorted launches online tool for investors to compare every KiwiSaver fund**

It asks what you earn and what your commitments are and then sets up a template to allow you to assign monthly spending to each category.

This is a helpful way to get a quick understanding of whether you're spending too much in any one category, and how much you might be able to save or invest.

2) SORT YOUR KIWISAVER

Compound interest boosts your returns when you save or invest over a long period of time. Moneyhub has a calculator that makes it clear.

There are lots of KiwiSaver tools online. One that I really like is AMP's because it allows you to determine, based on your age, income, contribution level and fund choice, whether you're on track to save enough.

You can choose to check your progress against a retirement saving goal, or a first-home deposit target.

The tool also allows you to change settings to see what difference that would make to your final outcome.

3) SORT YOUR KIWISAVER AGAIN

At the same time, it's worth checking whether you're in the right type of KiwiSaver fund for your risk profile. Generally, the longer you have until you need your money, the riskier your investment can be.

Westpac has a relatively detailed risk profiler tool on its KiwiSaver site to help.

While you're at it, you can get an idea of how much 'free money' you can get thanks to long-term savings.

Compound interest happens when money that you invest generates returns, which then generate their own returns… and so on.

Moneyhub has a calculator that shows how dramatically this can happen.

If you put $5000 in a KiwiSaver fund earning 5 per cent a year, for example, over 30 years you'll make $16,609 in interest, even if you never add to it again.

Tools to get your finances sorted may be in the palm of your hand.

4) INVEST

If you haven't checked out the Sharesies platform, it's worth investigating. You can start investing in managed funds and exchange-traded funds even if you only have $5.

It's an easy-to-use interface that makes buying units in funds a bit like online shopping.

InvestNow operates in a similar manner and ASB recently launched Wealth Central, where customers can review their investments and make new ones.

5) UNDERSTAND YOUR NET WORTH

Sorted has a net worth calculator, which will help to give you a quick picture of your overall financial position.

Net worth is a measure of what you own, minus what you owe.

'Personal finance needs to be about getting ahead, not just running in place. If you want to chart what really makes a difference, the net worth calculator will show you where you are now, and where you'll be in 5, 10 or 20 years' time, depending on the changes you make,' said Sorted managing editor Tom Hartmann.

'People's needs increase over time, and we tend to underestimate that. We have children, step in and out of the workforce and then retire. If your net worth is not trending as high as you'd like it to, or is flat, you can take steps now to change that trajectory. The calculator is a crystal ball you can use to take action now to create a better future.'