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The Happy Saver’s top tips on how to be better with money

Christine Jensen

As Kiwis, we don’t like talking about money; unfortunately, it’s just not our nature. Which means there’s a good chance many of us aren’t having conversations about it. This is one of the reasons Ruth Henderson launched The Happy Saver in 2016, a blog and podcast focused on allowing Kiwis to ask questions in a safe and welcoming community, and to share some of her real-life money experiences. 

The Happy Saver journey began when Ruth and husband Jonny paid off their house and wanted to figure out what to do with their extra cash. What they noticed was a lack of simple resources to help them chart a course. Without anyone to talk to herself, Ruth decided she could be that person for others and has made it her goal to break down the barriers about money talk and the stigma around it. Ruth isn’t a financial advisor, but she offers solid advice that we can all benefit from.

Why do you think there is so much stigma around talking about money?

Because many of us have an inkling that we are doing something wrong and are nervous to talk about it because we feel that we ‘should’ know how to handle money, but then when people get it right and are in a ‘positive’ position, and they do want to talk about it, they realise that no one else wants to talk about it or they can’t find anyone to talk to about it with. It’s a catch 22.

What are the common questions you get from listeners?

Firstly, where to start. Most people have an ‘ah-ha’ moment, that makes them begin to think about their money. Based on that, they wonder about how they start figuring it out. How do I manage my money better, create a financial plan, invest etc.? So I like to tell them to go back to the start, work out where the money comes from and needs to go to? Do they have debt? If yes, what are they going to do about it? In my mind getting rid of debt asap is crucial, then you can look to invest.

Secondly, where to invest other than housing? This question is asked by everyone, young and old. For homeowners who are mortgage-free, the next logical step in their mind is to get a rental property. They don’t know what to invest in New Zealand outside of property because that is all we tend to hear about.

How do you change someone’s mindset, the kiwi mindset, that is so set on buying a property as your first investment and often close-minded to other options? Can you?

In all my years of blogging, I’ve never had an argument; it’s not my place to convince someone to change their mind so I simply offer them options and show them what is out there, as an alternative to property. And you need to ask questions to help people come to their own realisations about what their motivation behind buying a house might be. If it’s because they want their own space, to get rid of a landlord and so on, then I can completely understand. But if it’s because “I have to get a rental property, it’s the next logical step to growing wealth” then I encourage them to think again. When people learn about investing in the share market a common response is “thank goodness I don’t have to buy property, I hate the very thought of it”! I also point out that putting money into property isn’t without risk, as we discovered when we lived in Christchurch and were affected by the earthquakes.

For those set on owning property at all costs as their only investment, I like to pose the question and suggest homeowners hedge their bets a bit. For every $100 they earn, put $90 towards the house and the other $10 into another investment somewhere else and see how they’re getting on five years down the track.

How did you balance building an investment portfolio against paying off your home? 

We did one then the other. We paid off our house in full, and then we started to invest. We signed up to KiwiSaver when it was launched, and then we started investing in managed funds then saw the fees were too high so moved to invest in index funds instead (jargon alert! Read the jargon box below)

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What are your top 3 tips for someone new to investing? 

  1. Educate yourself but do so using useful resources. I am constantly responding to emails and sending out links and resources to people that relate to the questions they ask me. If you can, learn off someone else. Find someone who you know is successful and ask whether you can take them out for a cup of coffee and ask if they can share their success with you. People are kind and like to share their knowledge.

  2. Don’t look for easy money - the best investing is slow and steady wins the race.

  3. Don’t keep up with the Joneses; they’re broke! You need to find your ‘why’ because that will give you a goal to aim for.

I was talking to someone who said: save the first hour of every day you work. The trick is to find habits that resonate and work for you.

For more, check out The Happy Saver’s top 10 money tips.

What are your top 3 tips for diversifying your portfolio? 

Honestly, index funds. The day I discovered index funds and realised I didn’t have to pick stocks was the day I thought ‘thank god for that’. Seriously, diversifying for me is:

  1. Owning our own house

  2. Having KiwiSaver

  3. Investing in index funds (not sure what these are? Find out more here). In my case every month without fail I invest in a US500, NZ50 and NZ Property fund

  4. And I know you said I could only have three tips, but my 4th is having 4-6 months of living expenses set aside so that I never need to sell any on my index funds under pressure

What should we be teaching our kids about money management? 

Teaching them from the day they earn their first $1 to save 50% of what they’re earning. No excuses. It might take a little longer to be able to buy that thing they desire, but it’s so so important to instil the lesson of investing a portion of their income for their financial future. It sets them up for great financial habits in the future. With our daughter, we encourage her to save half of every dollar she earns. “Invest for your future” is a better message to get across than save up and spend the lot, and then start all over again. Teaching them that money invested, when left alone will generate you an income, is crucial.

Any last tips?

Keep it simple, if anyone is trying to tell you something complicated, walk away. Learn to be content because the endless pursuit of more is draining both emotionally and financially, and it does not bring you happiness. Earn more than you spend and if you’re not earning enough, then spend less or get a higher paying job. Buy less house than the bank tells you you can afford, own it as fast as you can, invest in the share market from an early age. With a bit of education and a few smart decisions, you won’t have to work a 40-hour week when you are older, leaving you more time to enjoy your family and this wonderful country we live in.

Favourite podcasts (other than the Happy Saver, obviously):

No. 1 favourite at the moment: Bigger pockets - Wilson Muscadin

NZ:

USA: 

Favourite financial blogs: 

Favourite financial books: 

What’s Ruth looking at on Hatch? 

Gender Diversity Index ETF (SHE) - A fund of large US companies with a relatively high proportion of women in executive and director positions.