Photo: Unsplash / Tom Rumble
Rates have hiked across the country leaving some people staring at their bank account balances with dismay.
Earlier this year, Local Government New Zealand commissioned a report from Infometrics which found homeowners faced on average rates rises of 15 percent.
RNZ spoke to Enable Me head strategic coach and financial adviser Katie Wesney to find out how households could manage the extra squeeze on their finances.
Review your current cashflow position
Wesney says one of the first steps is to look at where you can cut back on your discretionary spending.
One of the easiest ways to approach this is by downloading or printing out the last three months of bank statements to review all the money coming in and out of the account.
After that, assess what is left over and what discretionary spending you can pull back on.
Read more:
- Explainer: What's gone wrong with local government?
- The Detail: When it comes to rates bills, the only way is up
Wesney says many New Zealanders fritter away around 15 percent of their income - with one of the biggest areas for overspending being on food.
Structure your payments
Structuring any regular payments can put you in a better financial situation, Wesney says.
She recommends setting up a bills account and automating payments to that account. That way, you get good visibility on the true cost of your bills.
Wesney also recommends a separate account for day-to-day expenses, such as food and petrol. Putting only what you want to spend into that account will provide you with a clear limit.
Spend intentionally to reduce costs
As well as limiting your funds only to what you want to spend, Wesney recommends when you do spend, spend intentionally.
That means being conscious of whether the spending is on what you actually want to be putting your money towards.
Another way to be more intentional with spending is not using your credit card, she says.
Set up a rates payment plan
For some people, paying their rates in smaller chunks such as fortnightly or monthly can be easier than paying them in quarterly chunks.
Wesney says breaking your rates down - for example, finding an extra $20 a week - may seem more achievable than an extra $1000 a year.
People can set up a payment plan through their local council.
Check your money is serving you well
Wesney recommends annual checks on subscriptions, as well as services like broadband and insurance, to ensure you are paying for products that best serve your needs.
She says there is often money to be saved in these areas.
Inject new cash flow
Wesney says many of her clients have looked at how they could make more money.
That could be selling items you no longer need, finding a side hustle or renting out a room.
Why have rates gone up so much?
The Infometrics report found all councils were facing increasing costs for their existing assets and services due to:
- Inflation
- Cost of servicing debt
- Increasing insurance costs and audit costs.
"Councils' share of overall tax revenue has remained at 2 percent of GDP for the last 50 years, despite our ever-increasing responsibilities," says LGNZ vice president Campbell Barry.
"On top of the cost increases to existing assets and services, councils also face new pressures that require new spending," he says.
The report found building costs had gone up significantly over the past three years, with
- Bridges 38 percent more expensive to build
- Sewage systems 30 percent more expensive to build
- Roads and water supply systems 27 percent more expensive to build.