What you do with your money makes a big difference to your future. Good money management skills can help you put a house deposit together, save you from stressing about debt, set a good example for your kids, and create a positive legacy for your whānau.

Being good with money is a skill you can learn – and you don’t need to wait until you’re earning heaps. In fact, the best time to start is right now.

This advice from Linda McCallum, loans officer at Ngā Tangata Microfinance, will help you get on the right track.

Where to start

What’s the first thing you want to do when you get paid? It’s probably not to pay your rent, settle a power bill or set aside petrol money. But before you start spending on fun stuff, the number one thing you should do is make sure your financial commitments are covered.

“Get your regular commitments sorted, then form your lifestyle around that,” says Linda.

Once you know how much you need to pay for your expenses, you’ll know how much you have left to save and spend.

Don’t over-commit

Try not to take on too many financial commitments, especially when you’re just starting out. For example, instead of buying a new phone with an expensive plan, maybe you could make do with your current phone until you’ve been working for a while.

“People just get used to whatever lifestyle they’ve got,” says Linda. “When you get paid you might think, ‘I’m going to buy this because I deserve it’, and you get used to having those things.”

She advises sticking with the basics that you really need, at least while you’re getting qualified.

“If all of a sudden you’ve got money you might go, ‘Great, now I can get a new car, I can join a gym, I can buy a new phone’. But I tell you, it’s not a good idea to have too many financial commitments.”

Be careful when buying a car

The biggest money pitfall to avoid?

“Definitely don’t go and buy an expensive car with a high-interest loan,” says Linda. “It absolutely kills people financially – it’s devastating.”

So avoid anything that offers you fast access to cash – you’ll usually pay heaps of interest in the long run. Remember, buying a car is a big decision, so take your time before you commit.

“If all of a sudden you get offered a job and you think you need to get a car really quickly, that’s when people make a mistake and sign up for high interest terms,” says Linda.

If you do need a loan, Linda recommends applying to the Salvation Army for a StepUp loan. You’ll need to show you’re earning money to qualify, so if you’ve just been offered a job, see if you can temporarily get to work using Uber, public transport or even a cheap scooter until money is officially coming in.

And don’t forget – cars are an ongoing expense. So while you should look for a cheaper car when you’re starting out, you should still get it checked by a mechanic, says Linda.

“If you can get a cheaper car that’s had a mechanical check, you can run that for a couple of years and then you’re a bit more set up to by a more expensive one.

“And remember you’ll need insurance. If you get a fancy car, you’ve got to insure it, and that’s expensive if the car cost a lot, especially if you’re under 25. So that’s another reason to get a less expensive car – but still a good car that’s had a mechanical check.”

Once you have a car, make sure you set aside money each week to cover the running costs so you’re not caught out if the radiator suddenly starts leaking or you need new tyres.

“I’d recommend setting aside about $20 a week for a car,” says Linda. “You need to be realistic about that so you can keep your car running well, especially so you can get to work. Keeping your car going is keeping your job going.”

Where to start?
Before you start spending on fun stuff, the number one thing you should do is make sure your financial commitments are covered.
Start small

You might think you’ll start saving once you’re earning big bucks. But even saving small amounts can make a big difference to your lifestyle down the track, says Linda.

“Save something small and realistic so that you keep doing it and you don’t start resenting it. You still want to have some spending money.”

Over the years, you’ll find saving small amounts regularly really adds up, and you’ll be glad you didn’t put it off. For example, saving just $20 a week will add up to more than $1000 a year. If you leave it in your bank account and don’t touch it, you’ll find the interest the bank pays you will grow significantly too.

And if you’re not already signed up for KiwiSaver, it’s well worth doing. Even if you just put in the minimum amount, you’ll get extra money from your employer and the government as a reward – adding up to much more than you’d be able to save on your own.

Just remember, KiwiSaver can usually only be used for retirement or buying your first home. So having some savings in your bank account is still a good idea because you can access it when you need it.

Get help if you need it

As an MPTT trainee, you can always ask your navigator for advice. If you need help with your finances, don’t be afraid to ask.

If you already have debt or need help making a budget, consider signing up with a budgeting service, says Linda.

“Wherever you’re living, go along to your local budgeting service and say, ‘I need to get a budget done so I know what to do with my pay’. Then once you’ve gone along, at least you’re registered there. It’s somewhere you can always go back to if you’re in trouble.”

Once you’re registered with a budgeting service – which is usually free – you might qualify for a no-interest loan from Ngā Tangata Microfinance if you need one down the track, such as for car repairs.

To help you manage your money, check out the links below.