Navigating the money maze: Financial wisdom to take you from student years to secure financial future

Those with skin the game – their own home, investment properties and/or mortgages being actively managed – might be familiar with assessing such vagaries of the market, keeping a weather eye on Reserve Bank OCR decisions, noting how banks respond with movements in mortgage rates, and staying alert to any signs of how the new government’s legislative programme might impact the market.

However, for those wondering if they’ll ever be able to afford a home, it can seem like a degree in economics or the intuition of billionaire investor Warren Buffet are needed to get a handle on the market, build a deposit before house prices outpace you again, and negotiate an affordable deal with a bank. There’s a danger that saving will be consigned to the “it’s all too hard” basket and leave it till later. But the sooner you start, the better.

And yes, that also applies to tertiary students. Whether you’re a student yourself, or you have kids and grandkids who are, there is never a better time to start learning how to manage money than now, no matter your financial situation.

The tertiary years are a crucial stage of embarking on academic journeys, but also for shaping financial futures. It’s a time of juggling studies, finances to live and pay fees, part time jobs, and, of course, the fun part of being a student. It’s also valuable to use this time to build an understanding of what it takes to establish a good financial foundation and start to build a good credit rating. It may sound like finance 101, but before delving into how to build good credit, it’s essential to grasp the fundamental concepts.

Credit is essentially borrowed money that individuals can use to buy goods and services. Debt can be super handy, but it does need to be paid back on time and with interest. It’s this interest that can make debt spiral out of hand quickly, so extreme caution is needed.

In New Zealand, creditworthiness is typically assessed through credit scores, which reflect an individual’s history of managing credit and debt obligations. These scores are crafted by computer algorithms, analysing your borrowing history and pertinent factors.

Having a good score can heavily influence your future borrowing potential so here’s a beginner’s guide to building credit wisely – one you might need yourself or the kind of tips to share with young adults in your life:

1. Obtain a credit report

Start by obtaining a copy of your credit report from agencies like Centrix, Equifax, or Illion. This report provides insights into your credit history, including existing credit accounts, repayment patterns, and any outstanding debts. It is free, unless you want it very fast.