Bolster Risk Management – Simplifying financial risk, insurance and investments for you.

A Recession Is The Best Time To Sort Your Money


In a recession nearly everyone is worried about money. We know that 62% of kiwis worry about money at least once a month. In fact, 23% worry about money daily. In normal times! So, if you are in a room with 10 people, six of them have had the cold sweats in the past month, worrying about paying debt, buying food, paying rent or covering the kid’s sporting activities.

So why is now the right time? A ‘‘down-turn” focuses people’s attention. It forces us all to look at how we are spending and what we are spending on.


  • Why now is a good time for you
  • Is replacing your insurance with a cheaper policy a good idea?
  • Is now the time to invest your cash?
  • Tips to help out


We know we should brush our teeth every day, not eat sugar, not eat fatty fast-foods and exercise regularly, but how often do you really do all these things? Like our money. We may think that we have a handle on our spending, but we get a coffee or soft drink every day. We up our Spotify subscription to premium to cut out those ads. Then we hear endless messages in the media about impending financial doom and we realise we should look at our own habits.

We start looking at how and why we spend the way we do. We then start to prioritise what is actually important to us and our families. Bingo. We have a defining moment where we realise that we don’t need Heinz beans we can have the store label. There’s a smart money choice. We rationalise our “treat” coffees to one a week, saving ourselves $20 a week. That’s $80 a month or $960 in savings a year.

Is replacing your policy with cheaper insurance a good idea?

This depends on your situation. Personal insurance is all about reducing financial risk. If you have insurance, you have it to protect you from loss of income or to cover your debt if you are unable to work due to illness, injury or death. If you reduce your premiums you may end up reducing your cover. However, is now a good time to ‘test the market’ and get a second opinion on the policy that you have? Absolutely. Now is the time to check that the policy you have in place is fit for purpose.

Does your policy match your current circumstances and budget? Just because when you last saw your broker 4-5 years ago everything was correct doesn’t mean that the situation is the same now. If anything, with everything that has been happening lately, now is exactly the time to review your cover.

That is an assumption of course. What if you don’t have life insurance, or any protection for your family? Now is the time. Why? If you’ve read this far, you are looking at your money situation right now. You want to make better decisions about where your money is going.

Should I invest my cash or leave it in the bank?

Start by looking at your own situation and determining what your goals are. The problem with leaving money in the bank is that you will get about 0.5%-1.5% of interest on a savings account. Per year. If you are lucky, by the time inflation eats away at that, you will break even. You may as well stick it under your mattress (no don’t do that!). There are much better vehicles, managed funds or “unlocked” KiwiSaver funds that provide safe investments with better returns. The benefit of these types of investments, is that they are relatively liquid (meaning that you can get to your money), unlike KiwiSaver which is locked up until retirement.

In a down economy, investments are usually cheaper, so ‘now’ can work better for some people who have the cash to make that choice. At the very least, now is the time to get into KiwiSaver if you haven’t already. The type of fund you’re in matters, so ask your adviser. If you don’t know who your adviser is, find another adviser. They get paid fees to look after you. If they are not keeping in contact with you, choose with your feet and walk elsewhere.

Some personal money tips

Don’t take unnecessary risks if you can avoid it. Watch your spending and ask yourself if you really need that next new shiny object. Keep a small fund that you can use for a rainy day. Most households in NZ would struggle if their income stopped tomorrow. Around 37% would struggle after just one month.

Don’t go guarantor on someone else’s loan without careful due diligence. Just because you’ve known cousin Joe for 20 years, doesn’t mean that now is the right time to take a risk. If you’re an employee, take the time to upskill and train. Don’t leave your employer with all the control over your future.

Budgeting. What a nasty word! However, there are some great free tools, such as sorted.org.nz and budgeting services (just Google “budgeting services” and your area) to help you get control of your spending. Control and budgeting are not the same thing. Budgeting normally needs willpower. We know that all of us struggle with having 100% willpower 100% of the time – learn a different strategy.

If you’re worried about managing money in a recession, now is probably a good time to consider chat with a financial adviser. Wherever you are at, whatever your financial situation, there is always a source of help. Many of us were not born little Warren Buffets, nor did many of us have basic money management classes at school. A financial adviser will be able to help.