Have we become a society that wants a quick fix and worries about the consequences of our actions later on?
Are we wanting things now and getting ourselves into financial stress because of our desire for that holiday or new car now?
Are we thinking about our future, or are we living in the present and not learning from our past?
Budget Advice, we have been seeing a lot of clients coming in and wanting to use their KiwiSaver to get themselves out of a financial situation that in some cases could have been avoided. In other cases, circumstances are out of their control, such as sick family members, and they have looked at a KiwiSaver hardship withdrawal.
KiwiSaver has been a fantastic invention, for many reasons.
It has helped people who are not that great at saving to be able to save, it’s helped with buying your first home and, for those in retirement, it has made it a little bit easier.
It has also been a godsend for those who have struggled with the inability to meet essential living costs.
This last one is the one we deal with the most.
To get KiwiSaver out as a hardship is not an easy process to go through. There are a number of factors that have to be considered.
One of them is seeking other help – have you contacted your local budget service to see if there are other options?
The application goes to the provider’s trustee, which is a panel of people who will process the application and decide whether to approve it.
On the application there is a section for telling your story and why you need to take it out.
Just writing “because I need it” is not enough.
These people don’t know you from a bar of soap, so a well-written piece about how you came to be in the situation you are in is vital.
Naturally, we would like people to be coming and seeing us before they get to the point of having to look at KiwiSaver hardship withdrawal to get help.
When you start work, you should, ideally, set up a savings account and put a set amount in it each pay day. This is paying yourself first. It doesn’t have to be a huge amount; any amount is positive.
If you have trouble leaving your savings alone for that new car, new kitchen or overseas trip, maybe look at putting some barriers in front of it. Instead of having your savings account sitting on your banking phone app and easily available, maybe take it off. Or putting your savings into an account with a completely different bank and making going into that bank the only access to it works well.
Savings can become very addictive and you may find the $20 a week you started with turns into $50 as you watch your savings grow.
Paying yourself first is fantastic but you have to make sure you are paying the essentials like the mortgage, rent, power and phone. Set these up as automatic payments on payday and pay them regularly.
Forward plan for Christmas and birthdays and set up Christmas club cards.
Forward plan for the unexpected. If it means setting up another account, then do so. I have a client who has eight separate accounts and every pay they have set up money to go into the other accounts and what is left is food, petrol and fun money.
By preparing and planning while you are working you will, hopefully, avoid the need to use a KiwiSaver hardship withdrawal.
If you need any help, then please do not hesitate to give us a call on 03 434-6196.
★ Katrina Kelly is a financial mentor for Family Works and the North Otago Budget Advisory Service co-ordinator.