Wages are down, cost of living is up. Here’s what you can do about it.

"Wages are down, cost of living is up. Here’s what you can do about it."

Ever get the feeling that things are more expensive than they used to be? No, you’re not just looking at “the good old days” through rose-coloured glasses. New Zealand cities have fallen in the global cost of living rankings but this is mainly due to a surge in how expensive overseas living has become. If you’re feeling the pinch of higher prices, you’re not alone. As a result, many people have had to tighten their belts – especially those earning minimum wage NZ.

If you’re in a job where you’re on minimum wage NZ, you’re going to be feeling the pinch more than most. As unfortunate as the current situation is, the question remains: what can we do about it? We’ll explore the minimum wage NZ, whether moving away is a viable option and how you can save money to combat the high cost of living.

What is the minimum wage in NZ?

On the 27th December 2017, the New Zealand Government announced that the minimum wage NZ would increase 75 cents from $15.75 to $16.50. This change came into effect on the 1st April 2018. In accordance, the starting-out and training minimum wage hourly rates increased from $12.60 to $13.20 to remain at 80 per cent of the adult minimum wage NZ.

While any increase is no doubt welcomed by the 164,000 Kiwis earning minimum wage NZ, the question still remains: is it enough?

As of 2018, the living wage in New Zealand is $20.55 an hour – $4.05 more than the current minimum wage. This has been calculated by The Living Wage New Zealand, a non-partisan group independent of both government affiliation and funding that campaigns for a living wage for all Kiwis. For those whose finances are a bit more comfortable, an extra four dollars an hour might not seem like much. But for those earning minimum wage, it can be the difference between affording the necessities or not.

The Government remains committed to raising the minimum wage NZ to $20 by 2020, as well as abolishing starting-out rates and considering changes to the training wage. But with this long-term goal still falling 55 cents short of the current living wage, and with possible increases to the cost of living still to come, those earning minimum wage NZ will be inclined to ask for more.

Should you move away?

When faced with the high house prices here in New Zealand, those in a position to do so might consider moving away. It’s unlikely that this will be an option for you if you’re earning minimum wage NZ, but let’s look at moving to another country might involve.

The immediate option for most looking to move overseas is Australia. Why? Well, it’s close, so you can still come back to New Zealand to visit friends and family, the cultures are quite similar and many people already have contacts there. It is, seemingly, the logical choice. However, while some reports suggest that Auckland has overtaken Sydney in terms of housing prices, it seems that the overall cost of living across the ditch might make moving to Australia the more expensive option.

Going by the same Sydney to Auckland comparison, Budget Direct suggests that Sydney is more costly in almost all areas. 2015 was the first year since 1991 in which more Australians moved to New Zealand than vice versa, and that could be the start of a new trend.

How you can save some cash on the side

For most of us, turning the tide on the rising cost of living and falling wages is a bit out of our control. All we can do is take care of our own finances. While it’s probably not going to make the difference between buying a house or renting, there are some ways you can save and make your money work best for you – even if you’re earning minimum wage NZ.

Let us take you through a few of the ways you can turn those coins in your back pocket into cash for your savings account.

1. Decide on your savings goal(s)

Before you start saving, it’s a good idea to have a goal in mind to work towards. In many cases, people will have more than one thing that they want to save for. These can usually be split into two categories: short-term and long-term goals. Your short-term goals are smaller targets and might consist of anything from a holiday to a car. Long-term goals, if you haven’t already guessed, take longer to save for as they require more money. Saving for a house or retirement are common long-term goals.

If you’re earning minimum wage NZ, chances are your focus is going to be more on those smaller, more immediately achievable goals. However, this doesn’t mean that you should abandon all hope of saving for the long-term. Your circumstances could very well change, and the nest egg you begin to create while slogging away on minimum wage NZ could be the foundation for your future housing deposit.

Regardless of what your personal savings target is, having a goal in mind when you start can be an excellent motivator to keep going. And when one savings goal is reached, make sure you have another in place so that you don’t fall back into bad habits.

2. Set up a designated savings account

Having all your money sitting in one account can increase the likelihood of spending. Checking your balance and seeing a nice big number fools you into thinking that it’s okay to splurge. To avoid this, we recommend setting up a second designated savings account. You can name the account after what you’re saving for, so if you’re ever tempted to dip into it, you know that you’re taking away from that goal.

If you’re not confident in your willpower or remembering to transfer money to your specialised savings account, don’t worry. Rather than having to physically transfer part of your earnings into your savings account every payday, you can set up an automatic amount that goes into your designated savings account whenever your pay comes in. This decreases the strain on your willpower to resist temptation and allows you to save more in the long run.

As much as you want to avoid them, there may come times when you have to dip into your savings – especially if you’re earning minimum wage NZ. If you’re forced to do this, don’t beat yourself up about it. Spending savings for an emergency is different to taking money out every week for unnecessary purchases. Even if you cave and take a bit out to treat yourself every now and again, it’s not the end of the world. Just stay focused on your savings goal and what you can do to get there!

3. Make use of saving and investment apps

In addition to allowing us to get overly invested in mobile games and get just about any kind of food delivered right to your door, apps can also help you save! One such app is ASB Bank’s Save the Change. Linked to your bank account, it rounds up electronic transactions and puts the difference into your designated savings account. You don’t even have to think about it!

Once you’ve saved up enough money, you might turn your attention to other ways you can increase your savings. If that sounds like you, then investing might be up your alley.

We realise that to those just starting out, investing probably doesn’t sound that exciting. It requires a lot of attention, research, and time If you want to get into investing but you’re not quite sure where to start, there are a few apps that can help. Raiz, an Australian based company, offers a service that might suit novice investors. It’s a similar concept to the Save the Change app in that it rounds up on purchases you make. But instead of delivering those cents to your savings account, it invests them in a diversified portfolio.

These are of course only a couple of examples of the multiple savings and investment apps in existence. It’s best to search around and see if there are any that sound like they might work for you. Micro-saving apps like the ones mentioned above are good starting points, especially for those on minimum wage NZ, as they don’t require you to have stacks of cash. If you could do with some extra assistance to help you save, check out what the world of finance apps has to offer!

4. Organise a realistic budget

We won’t lie to you: this one’s not going to be particularly fun. But, to get an idea of what areas are causing the biggest drain on your bank account and where you can cut down on spending, you’re going to have to sit down and do some digging into your expenses.

Organising a budget means going through and calculating how much you spend on things, from groceries to accommodation. Having all this information in front of you makes it a lot easier to see where you can cut down. However, that doesn’t mean you should get rid of the necessities. We don’t recommend sacrificing your health to save a few extra dollars.

For instance, if you have a gym membership which you use regularly, that’s a necessity. If you’re irregular with how often you go then perhaps research some home workouts and see if they would suit you better. Save where you can, keep what you need.

5. Spend smarter

Some people might hear the words “saving money” and automatically think of buying lots of things second hand and living off 2-minute noodles while you sit alone in your kitchen with the lights off. However, cutting down on costs doesn’t have to mean misery.

How many times have you been walking past an unhealthy snack and bought it just because you could? Over time, those little unnecessary purchases build up. The key when shopping for food is to maximise healthiness and the number of meals you get, while minimising spending.

There are a few simple ways to beat those unhealthy impulse buys.

  • Plan ahead. Before you go to the shops, try and have a plan for what you’re going to make through the week. Write down what you need on a list and cross off each item as you go.
  • Calculate the costs. Most shopping centres have prices per kilogram on their cost information, so make use of the calculator on your phone to see which products are cheapest.
  • Check for specials. While you want to stick to your list as much as possible, keep an eye out for any markdowns for products that suit your meal plans.
  • Buy in bulk. If possible, buy larger quantities of foods that can either be frozen or kept for long periods. This will often allow you to save money.
  • Make leftovers. Cooking a larger amount than you immediately need for dinner allows you to have the leftovers for lunch. That way you don’t have to cook anything more or waste money buying food.
  • Cut down on the bad stuff. As yummy as they are, it’s time to say goodbye to unhealthy foods such as alcohol, sweets, and other snacks. Your budget will thank you, and your body will too.

6. Don’t be discouraged!

Saving money isn’t an overnight phenomenon. It takes discipline and patience, and neither of those things are easy to come by. There will no doubt be times when you simply want to spend your money on any half-tempting offer you see. In these moments, it’s important to keep the bigger picture in mind. These flights of fancy might bring you immediate satisfaction, but they don’t compare to the payoff of reaching your overall savings goal.

It won’t happen straight away, but keep at it and you’ll get there.

Control what you can – try not to worry about the rest

As difficult as it can be to deal with the rising cost of living, it’s not something that you alone can change. Try and focus your energy on modifying your own habits for the better in order to make the money that you’re earning go further – even if you’re on minimum wage NZ.

Keep up to date with Jacaranda Loans NZ!

Did this post help you out? Well, good news! We roll out blogs just like this one regularly to fill you in on everything from finance to culture. And if you’re interested in how Jacaranda Loans NZ might be able to help you out on the road to obtaining some extra funds, check out our website to learn more about our lender-finding service!

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