The Pursuit of Wellness: Economic wellness

7:32 am on 30 July 2020

By Mary Holm*

The Pursuit of Wellness is a five-part series looking at all aspects of the concept of wellness.

What is economic wellness? I went on a long walk to ponder this, and finally came up with: Having enough money for necessities plus some fun. And knowing that should continue for the rest of your life, even if the unexpected happens.

Recent events are a great example of the unexpected. Many KiwiSaver balances plunged - although they later recovered - and some people are losing their jobs or seeing their income fall.

Nobody welcomes this. But economically well people take money upsets in their stride because they've got back-ups. They're in control.

How can we achieve economic wellness?

Spend less than your income

We've already acknowledged that we all need some fun in our lives. But it doesn't have to be expensive.

People who run up debt to fund their lifestyle are doing the economic equivalent of smoking, drinking too much and not exercising. One day it will catch up with you. And in the meantime it must be - or at least should be! - stressful.

If you're not paying your credit card bill in full each month, change that. If the debt is too big to pay off fast, make getting rid of it a top priority. It's a wealth killer.

Have enough insurance

Think about "what would happen if", and insure your home and contents (or just contents if renting); your car, jewellery and other valuables; and your income. Too many New Zealanders don't bother with loss of income insurance and live to regret it.

What about life insurance? While you won't benefit from it, if you have dependants and you don't have this cover, you should feel guilty enough for it to harm your health!

On health insurance, see below.

Set up a rainy day fund

You never know when you'll face big dental, car repair or house maintenance bills, or you're out of work for a few weeks.

It's good to have three months' income tucked away, perhaps in one-month term deposits. Then you can put emergency spending on a credit card, and by the time you have to pay the credit card bill a deposit will have matured.

Another good place for rainy day money is within a mortgage. Ask your lender if you can pay extra off the mortgage on condition that you can borrow that money back in a tight spot.

Save enough for retirement

Economic wellness is not about dreading old age because you'll have to rely mainly on NZ Super. It's about watching your savings grow.

You'll probably have at least part of your retirement savings in KiwiSaver, to make the most of government and employer contributions.

If you can't cope with seeing your KiwiSaver balance fall a long way - as it may have lately - gradually move into a lower-risk fund. But don't be too cowardly, as higher-risk funds have the best long-term growth.

Perhaps put a small portion of your savings in higher risk, and watch how it always recovers from downturns. That might give you the courage to add more.

However, once you get within 10 years of spending the money - on a first home or in retirement - reduce your risk. You don't want your balance to plunge right before you plan to spend it.

Buy a house?

Not necessarily. Despite what some oldies say, you don't have to own your own home to be economically well.

But if you don't, it's wise to save considerably more for retirement than your homeowner friends, so you can either cover your rent into old age or perhaps buy a home at that stage.

Will our health improve if we achieve economic stability?

Financial stress contributes to many health problems. And if money worries keep you awake at night, the lack of sleep won't help either!

If you've got your money sorted, you can relax and enjoy the good things in life, and cope with the bad things.

Is it easier to be well if you have money?

To some extent.

In New Zealand, everyone has access to subsidised or free public health care. Beyond that, though, people with health insurance can often get quicker access to good care.

For example, you can get a hip or knee replacement much faster if you have insurance. If you're hobbling around waiting for a replacement for months, you are hardly well.

I recommend having health insurance to cover surgery and perhaps specialist visits. For most people, though, coverage for GP visits - which costs more - is not necessary.

But wellness is not just about health care. In this country you can buy fresh fruit and vegetables and other healthy foods at reasonable prices. Some would argue that health supplements are expensive, but experts often say most of those are not necessary anyway.

Exercise? Well, you can spend heaps on getting and staying fit - perhaps at an expensive gym or on the ski slopes. But it doesn't cost much to buy some good walking shoes that will last a couple of years, or a pair of togs that will last a couple of summers.

What it all amounts to

You don't need lots of money to be economically healthy. Spend within your limits, cover yourself for when bad stuff happens, and get that KiwiSaver fund looking good.

*We hope you enjoyed this article. For more on wellness, please check out Healthy or Hoax - a new podcast where host Stacey Morrison puts her body on the line to find out whether new health trends are actually good for us. Subscribe to Healthy or Hoax for free on Apple Podcasts, Google Podcasts, Spotify, iHeart Radio or wherever you listen to your podcasts.