FINANCIAL BUDGETING

The start of 2025 has shown how volatile the world is and, in many ways, beholden to the cost of fuel and energy dramatically requiring most people to have a ‘financial reset’, with a necessity to assess their budget and hopefully be able to plan for some improvements. 

A few practical changes can make a real difference. 

STEP 1: ASSESS WHERE YOU’RE AT RIGHT NOW

A financial reset starts with an honest assessment of your current finances. 

Time to get clear on whether you have overspent and if so to make some changes.

• Review your Bank and Credit Card statements for the previous 3 months
• List all debts, like credit card debt, personal loans and ‘buy now pay later’
• Know your repayment dates and interest rates for each debt

STEP 2: ADJUST YOUR BUDGET FOR REAL LIFE

Your budget should reflect how you live but be flexible enough to handle life’s unpredictability.

• Be honest about your spending habits. Instead of pretending you’ll cook every meal at home, build in a realistic amount for occasional ‘takeouts’ or a trip
• Emergencies and unplanned costs are part of life, so have a savings fund set aside to cover these.
• Prioritise the essentials and whether it’s cutting back on your daily coffee to save for a holiday or reducing unnecessary expenses to get debt-free faster.
• Review and make changes to fit your lifestyle and needs

STEP 3: TACKLE HIGH-INTEREST DEBT FIRST

Tackling your high-interest debt first, reduces the debt that costs you the most. 

It also saves you from paying costly interest charges and frees up cash for other goals or debts. 

• Organise your debts by interest rate from highest to lowest
• Pay the minimum owing on all debts except the one with the highest interest rate
• Put any extra money into the high-interest debt until it’s paid off
• Once the first debt is gone, use the money from the first debt towards the next highest-interest debt, and so on
• Each debt cleared will give you a sense of accomplishment and help you to stay motivated

STEP 4: CUT BACK WITHOUT CUTTING JOY

Resetting your finances doesn’t mean giving up everything you enjoy, but insteadreducing your spending in ways that don’t feel like punishment.

• Budget with intention by setting aside a little money each month for guilt-free spending or set spending limits which can be easier to stick to
• Track your spending to know where your money goes, so you can make good decisions about where to cut back and what you can realistically afford
• Take a short spending holiday, by pausing all non-essential spending for a short reset period  
• Cut wasteful expenses and review your automatic payments and subscriptions and cancel any that are unused or unnecessary

STEP 5: PLANNING AHEAD

The last step in a financial reset is planning early and putting simple systems in place to avoid money stress.

• Set a festive season budget and a savings goal. Open a separate savings account just for holiday spending and automate savings into it each month
• Spread out spending over the year. Buy gifts, decorations and other extras little by little, instead of all at once. Take advantage of off-season clearances or holiday sales
• Have an emergency fund. Keep a small emergency fund to cover unexpected expenses so you’re not caught off guard and don’t need to go into debt

Start the year feeling confident

Money stress is common and you’re not alone if you’re feeling the pinch.

To get help talking through options like budgeting, debt consolidation or loan restructuring to help you reset your finances, all you need to do is simply pick up the phone and call 0800 LENDER (536337) or email to help@ilender.co.nz  to get started as we’ll be happy to help.