When I was asked to become a Money Week Ambassador, I happily accepted. When I was asked to write an editorial about Making a Date with Your Money, I was still happy. No problems. I would trawl through Consumer's enormous number of terribly wise articles on managing your finances, filching the nuggets, finessing the advice, and fulminating at the usury of some financial institutions. And finally ... if I'm honest, take little of this advice myself.
That made me think, what is it about some people and their money that makes them so easily parted? Being the Consumer boss, I know a lot more than most about the cunning ways people are separated from their money - legally and fraudulently. But many of us don't need a snake oil salesman to part us from our earnings. We voluntarily part with it. Simple examples include:
- Making only minimum repayments on monthly credit card bills. In the long-term this means paying exorbitant interest rates for stuff you might have bought on sale. How dumb is that?
- Paying too much for your electricity or gas when it's free to check if you’re on the cheapest plan (I know because Consumer NZ runs the free Powerswitch website). In some households the savings can be hundreds of dollars a year.
- Making minimum mortgage repayments – check out what that means in interest rates paid to banks. That's tens of thousands of dollars that could have been yours.
- Paying too much for your mobile and internet services.
- Buying a big-ticket item on terms of 24 or 36 months' interest free – then not paying it off on time. Check out the interest even if you are a day late and weep
Actually, I don't fall into any of the above traps. I have learned it's madness not to pay off your credit card in full every month. Direct debiting or direct crediting are the answers. That way you are never faced with the conscious decision of to pay or not to pay. It's the same with utilities, rates and insurance. They all get paid without me lifting a finger. I've even recently chosen a credit card on the basis of the benefits it gives me, not just because it's the one the bank sent me.
I'm lucky – I work in a world of zealots. I don't need to go far to get advice on how to make my money go further. But I'm also a shopper. I love buying stuff – from kitchen sinks to designer boots. Put me in a shop of any variety and I can find something to buy. What that means is, unless I take a common-sense approach to my money (and the easist way to preserve it), I can't shop. Unless I shift my small amount of savings from a non-interest bearing account to one that earns a (pitiful) amount of interest, unless I pay my bills on time, unless I check out the cheapest options for utilities, I can't spend on items I really want to spend money on. It's that simple.
This article was originally published in the Rotorua Daily Post.
About the author
Sue Chetwin has been our Chief Executive since April 2007 after more than 25 years in print journalism. She was formerly the Editor of Sunday News, Sunday Star Times and the Herald on Sunday. She says there are strong parallels between consumer advocacy and journalism.
Sue oversees all of Consumer’s operations and is also the public face of the organisation. Sue is a director of the Banking Ombudsman Scheme, an alternate on the Electricity and Gas Complaints Commission and a member of the Electricity Authority Retail Advisory group.