Icebreaker! Buy Now Pay Later — yay or nay?
It depends how you use it. If you’re using BNPL to pull forward purchases that you can’t afford, then you’re playing with fire. If you’re using BNPL as a shopping app, and could pay for your purchases with cash if you wanted to, then there’s no problem.
Please indulge a little rant here. It annoys me to hear criticism of BNPL from banks.
BNPL is generally a better consumer product than the credit cards that banks continue to push.
What’s your approach to managing money?
Boring — I pretty much follow the Personal Finance New Zealand subreddit guide.
I like to have some cash available for emergencies. I’ve just switched to using Kernel’s cash plus fund for this purpose. This fund aims to deliver a better rate than a savings account, and your money is available immediately upon notice.
Then any extra dollars go into high-growth funds which mainly consist of shares. I’m using Simplicity’s unhedged global share fund and Kernel’s high-growth fund.
Do you do anything special to keep engaged with your money?
My wife and I use PocketSmith to give ourselves visibility over our joint finances. We then Marie Kondo our spending each month to ask: “Is this sparking enough joy?” The aim is to cull spending that doesn’t deliver enough value.
I give 2% of my pre-tax income to the Maximum Impact Fund. If you’re interested in philanthropy and delivering the most impact with each dollar, then this is a good option for New Zealanders (because you can snowball the tax deductions to increase your donations). Giving a percentage of my income helps me feel less selfish about money — if I earn more, then the benefits flow to others as well.
I also try to remember how insanely wealthy we are in NZ. Here’s a calculator where you can see your estimated global percentile for income. If you earn the median income in New Zealand, you’re in the top 4% of income earners around the world. It’s human nature to compare ourselves to others and feel envious at times. But zooming out to a global perspective makes me feel lucky to have been born in New Zealand at this point in the history of the planet.
How important are financial goals and do you have any you’re working towards?
I’ve probably got a non-consensus view on this one. Whenever I try a new fintech app, and it asks me to set a goal as part of onboarding, it seems forced. I don’t need to have goals such as saving for a holiday or new clothes in order to feel motivated to save. I reckon you can optimize your financial life and have your money compounding in your favor without needing specific goals.
That said, I think there are always some financial pressures or objectives lurking in the background. My wife and I now have three kids and one income. We’re currently trying to “not go backwards” financially. We’re also trying to be financially resilient, meaning that we can handle a surprise expense, and we’re not handcuffed to suboptimal jobs. Perhaps these are “goals” if you squint, but they feel a bit different to me because we’re not going to mark them as “done” at any point in time, and we expect them to evolve over time.
Where do you get your financial knowledge from?
First shoutout goes to my dad. As kids, he encouraged us to earn money more broadly than regular jobs. So my sister and I rented a small block of land to run cattle and grow crops. And we all started little businesses as youngsters that gave us a steep learning curve on money.
The next shoutout goes to a training session on financial statements that I received as a baby lawyer. It made me realize how I’d started leaning away from financial literacy, and made me decide to lean in.
And then the biggest shoutout goes to the FIRE blogging community. In particular, I’ve been heavily influenced by Mustachian philosophy. Here’s a photo of my brother and I fanboying outside the Mr. Money Mustache headquarters in Colorado in 2019.
The bloggers in this community were revelationary for me because they’re shockingly transparent about how they manage their finances, and they provide specific recommendations instead of the usual watered-down suggestions. The influence of these bloggers is probably why I chose to mention the specific funds that I invest in above. And it’s definitely why I decided to start a blog called MoneySecrets a few years ago — I’d learned so much from that community and felt like I should contribute something after absorbing so much. Please don’t check the most recent blog date though… let’s just say that life has been busy recently.
What do you love spending money on?
Macadamia nuts and dark chocolate.
And also my physio, who I credit with taking me from some dark years with back pain to a point where I can now play tennis, surf, or go for a run without regretting it the next day.
What has been the best investment you’ve ever made?
This is cringe… but my family. Those are the most important relationships to me. I could have all the money in the world, and if those relationships were sour, then it would count for nothing.
Have you ever experienced financial difficulties?
No. Mostly through luck and partially through being naturally diligent with money.
Financial stress sucks, period. But I don’t like the feeling of financial abundance either — I think that constraints are healthy. I’m a big fan of “reverse budgets” for this reason, because if you’re in a great position where you’re moving forwards financially each month, you can increase your “savings rate” so that you still feel some constraint. I think that helps to make you feel more grateful for your purchases.
This is a bit weird, but I also like doing things like hitchhiking that pour cold water over any feelings of affluence.
What advice would you give someone just starting out with their finances?
Follow the Personal Finance New Zealand subreddit guide!
A word of warning. The first step tells you to create a budget. I always worry about that because no one is born with budgeting skills, and many people drop off at that first step. If you’re worried that you’ll drop off:
- Use PocketSmith to create and track a budget! They automate the hard parts.
- Even if you skip the budgeting step, you can still consider and act on the subsequent steps in the guide.
If you like the idea of a heavily structured guide, I know many people that have sorted their finances by following the Barefoot Investor.
What’s the silliest thing you would put on a new design for the $100 note?
A picture of The Royal Family dance crew (2015) on one side. Flight of the Conchords on the other.
This interview is part of New Zealand Money Month 2023. NZMM is coordinated by trusted personal finance resource Sorted, in partnership with the financial capability community, and it involves events all around the country to encourage New Zealanders to talk about money and develop greater financial capability. To further the conversation about money we got in touch with some of our pals in the personal finance space to get their perspectives on their own finances.
