Anyone that follows motorsport will know about the month of May. The month of May is the term given to the builder for the Indy 500, which is the largest motor racing event in the world and considered the largest single-day sporting event in the world too. For those same motor racing enthusiasts, it’s also the month where Monaco hosts the Grand Prix.
But closer to home, and in the world that really affects us all the month of May in 2025 may see some interesting news.
There are a few key things to be watching out for:
- Official Cash Rate (OCR) announcement by the Reserve Bank
- Monetary Policy Statement by the Reserve Bank
- Budget 2025 by the Government
We have another OCR announcement, and there’s been lots of chatter about what may happen or what may not happen. The world is a funny place at the moment, and a lot of economists are ducking for cover and not really wanting to predict too much.
There’s been quite a bit of talk about the OCR and the potential for another interest rate drop, and most predictions have been that interest rates could drop 0.25%. But there also seems to be quite a bit of talk at the moment around the economic uncertainty and a bit of a fall in business confidence.
So, a bigger drop could be on the cards although many people are saying this is probably a little unlikely for May.
The other thing that happens alongside the OCR announcement is a Monetary Policy Statement.
This is where the Reserve Bank provides some outlook as to what they are thinking may happen in the months ahead. This will be the first monetary policy statement since Adrian Orr resigned from the Reserve Bank, and there’s talk that they may even hold back from giving advice on what may happen moving forward.
In recent weeks other countries have done this; they’ve stopped giving financial outlooks, and so many think that that could happen in New Zealand as well.
Our hope is that it doesn’t happen here and that they do continue to give forward outlooks, as it gives a little bit more certainty to not only homeowners with interest rates but to businesses as well.
The other big financial event that we have in May is the Budget 2025.
Now, this will be interesting in itself because they’ve already said that there’s not a lolly scramble going to happen. I think most New Zealanders know that the country is not in a healthy financial state, and Nicola Wallace has made no secret that she is looking to cut costs rather than throw cash around.
There’s already been a commitment to more investment in certain areas like defence, health, and police, and there’s also been a lot of talk about reviewing how money has been spent and chopping that where it’s deemed as being wasteful. These are all things that are happening, but as individual Kiwis, we have little or no control over.
So, where should we focus our own personal efforts in the month of May?
What Can You Control?
The key is to look at what we can control rather than worry about what we can’t control.
We can’t control what happens with interest rates, but we can control the strategy that we use to manage our risks with interest rates.
We can’t control how much we earn with a salary, but we actually do have some influence to look for higher paying opportunities or to try to create some additional income.
We definitely have control over what we spend! Now, that’s not necessarily total control because certain things are must-haves and controlled by monopolies, such as our rates. But if you look at things like insurance, you can always review what you’ve got and see whether there’s potential for savings. Household costs like food and entertainment, of course, we can control.
It’s not necessarily huge cuts to expenses, but I think if we’re honest with ourselves, most of us can find some savings if we need to. It’s worth reviewing your expenditure and doing a budget.
Talking about savings and investment, we can be smarter with that too. Make sure that your savings and investments are going into the right products. Have an emergency fund and work on building that up so that you’ve got two to three months of your mortgage payments at least in an account that you can access easily.
Don’t leave too much additional money sitting in a bank account earning minimal interest rates. It’s better to invest that, whether that be in term deposits, cash funds—which is my preference to term deposits—or in actual proper investment funds.
With your KiwiSaver, review where you have it, both for the company you have it invested with, the provider, and the types of funds that you’re investing in. In short, don’t leave your investments; give it some thought and seek advice where necessary.
On the other side of the ledger is your debts. You should know exactly what debts you have and what they’re costing, and then the aim is to work on paying them and having a definite strategy for doing that.
Short-term debts like credit cards, store cards, and personal loans can be extremely expensive and take a lot of money out of your pay packet every week, fortnight, or month. So, you need to try to minimize those, and that could be as simple as a debt consolidation to tidy it up or implementing a debt repayment strategy to try to get rid of the more expensive first using one of the snowball effects.
You also have your mortgage, and for most people, that’s the largest financial commitment that they will ever have. You really need to consider reviewing your mortgage so that you can pay it off faster but are not forced into a situation where it becomes unaffordable.
Too often, we see people are just too complacent and accept having a home loan that gives them little or no flexibility. In the last few months, we have refinanced a lot of people’s home loans and got them into better loans where they can manage them and pay them off faster.
Make A Change This Month of May !
You need to speak to one of the advisors about this, as it can make a huge difference to your finances right now, but more importantly, in the months and years to come.
Don’t ignore your mortgage or be complacent thinking you’ll review it another day – it’s something that you can do this month of May.
