Suze Orman, former financial adviser to Merrill Lynch, once gave some free and timely advice, although it’s something many may already know at heart: “If you're not staying on top of your money, you are putting your financial wellbeing at risk.”

While that’s undoubtedly true, having a plan in place to provide for your future can not only improve the health of your savings account, but can also work wonders for your physical and mental wellbeing.

Financial life-planning is a way to look at various stages of your life and plan your money requirements around them. The trick is to look at as many variables as you can, to paint the most accurate picture of the future as possible.

That’s why PwC decided to invest in the quality of our financial modelling. The model we use today to help our clients was developed with the assistance a world-leading financial modeller – simply because the better the picture you can paint of the future, the more prepared you can be.

Three important answers

With planning comes a great deal of power and opportunity. For some, they will find out that they need to increase their savings if they want to one day meet their goals; for others, they may realise they can retire sooner than they thought. Even finding out you’re tracking along as expected can be a huge relief.

You can’t understate the importance of financial life-planning, though there are still plenty of Kiwis who haven’t even glanced into the crystal ball – perhaps unsure of what they might find out. So, let’s look at some vital answers you might get from learning more about your financial future.

1. Can I afford to buy a new house?

There’s a lot of trepidation around New Zealand’s property market, particularly in Auckland, which was named the fifth least affordable city in the world in early 2017. While there are certainly issues of affordability, the market is not always as restrictive as some may imagine.

By looking at your finances, interest-rate trends, house prices, mortgage costs, debt, and other influencers, you can get a more solid understanding of whether you can realistically afford a new home in your current financial position, or if you’ll need to improve your situation to get there.

2. Do I have enough life insurance?

This is quite a specific question, but as an example I worked with a client who, when we looked at her information, didn’t have a comfortable level of life insurance – it certainly wasn’t as complete as she’d hoped.

Should something have happened to her, it would have meant an immediate change in her family’s quality of life. Her husband and children would likely have had to move house and downsize straight away. Instead, she was able to correct her level of coverage before it caused serious problems.

3. What will my finances look like if I live to be 100?

In the past 50 years, New Zealand’s average life expectancy has increased from 71 to 81, according to the World Bank. Thanks to the amazing advantages in healthcare, better aged care and our increased ability to treat medical conditions through technology, the number of Kiwis batting a century will continue to grow.

That could be 20 or 30 years longer than you’ve financially planned for, and people will begin to wonder if they can maintain the quality of life they’re accustomed to decades after retirement.

That’s why financial life-modelling provides best- and worst-case scenarios, so you can gain some valuable insights – even over things that are completely unknowable, such as how long you’ll live.

What does your future hold?

A few surprises in life are a good thing, except when it comes to your finances. In my experience, not one single person who has taken a deep look at their future financial position has regretted it, and it’s very easy to get started.

It always surprises me how diligent people can be in managing the ageing process – whether it’s staying fit at the gym, eating healthier, or sticking to a rigorous, wrinkle-fighting beauty regime – but when it comes to money, they apply a fraction of the same effort.

Financial life-planning isn’t painful, but it is informative. Having that information and taking steps to understand how much money you’ll have and need at different ages and stages of life will determine your future health, wealth, and wellbeing.

First published 15 August, 2017

By Robbie Gimblett, PwC

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.