Life has seasons. There are good times and bad times, and the changes are often caused by factors outside our control. At a personal level, our health, employment status and family relationships can all work either in our favour or against us. At a higher level, the economic state of the region we live in, of New Zealand, and of the world, can have an impact. Our personal finances can be directly affected by global politics. Take, for example, Donald Trump’s intention to impose tariffs on a wide range of goods imported into America. Tariffs reduce the demand for imported goods. New Zealand, as an exporter, can suffer a loss of trade, which then affects businesses in New Zealand and flows through to the employees of those businesses. The lesson here is that planning your personal finances cannot be done in isolation from what is happening in the world around us. The state of the economy is not something to be ignored.

Right now, we are in a bit of a sweet spot. We have low interest rates which make borrowing attractive. Inflation is low which is great for the cost of living. Economic growth is good, which means unemployment is low. There is a huge demand for skilled tradespeople to work on housing and construction projects. Investment markets have been producing good returns. We need to make the most of the good times. That’s because just as night follows day and autumn follows summer, good times in an economy are followed by not-so-good times. Now is the time to be focussing on getting rid of debt, before interest rates rise again, and getting the right balance between spending an investing. Setting up good investments now will provide a return to create extra income when things are not so good.