Top 12 Financial Traps of 2026, Ranked by NZ Advisers | EP24

Twelve traps, one countdown

Rory: Howdy, folks. We're back with another episode of the Blueprint Finance podcast, where we talk to Kiwi just like you about smarter ways to set up your finances. I'm here with the man, Dan, and we've got a hell of a topic today. What are we gonna talk about, Dan?

Daniel: This is a super exciting episode, and it's a really good one, because we actually collaborated with the whole team at Blueprint to gather what we think are the top 12 financial traps of 2026.

Rory: Some real pitfalls you want to avoid.

Daniel: And we've ranked them. So listen the whole way through, because you don't wanna be slipping up on number one.

Rory: It's like a WatchMojo.

Daniel: You get the top 12, and then the honourable mentions as well.

Rory: Well, kick us off, man.

Trap #12 — Wills are boring until they become a nightmare

Daniel: Coming in at number 12, we've got never reviewing your will. A will is a really important document — it takes care of people's affairs and decides what happens to their estate when they're not here. And people's lives change all the time, so their will should reflect that. I'm actually guilty of this myself. We had this conversation, right? We've got an 18-month-old daughter, and we haven't updated our will. We need to decide who's gonna be godparents, who the primary carers are, God forbid something happened to me and Sammy. We've had the conversation, but we haven't put it into the plan.

Daniel: It's a tricky one. Certain things like that take a little bit of conversation, but we're in that boat — we're in the trap. We're not taking care of our affairs because it's too hard. We're kicking the can. Children are a big one, marriages and separations, and people starting businesses. We had a conversation earlier about looking at shareholder protection for this company. It's not will-related, but if you're in a business and one partner falls over, and their wife comes in to take her stake of the business, what does that mean for you? So have a plan for that — some cover, a written agreement, all that sort of stuff. What do you reckon?

Rory: I think you're exactly right. And as we go through the list, I think we should be forthcoming and vulnerable with our listeners and say when we're victims of these financial traps ourselves — so I appreciate you saying that, because we're not perfect. The will is something you write once, but it has to be reviewed every couple of years, because your situation's always changing. It just cracks me up when you bring that up about our business, because we did joke about the fact that if the three directors of Blueprint Finance — myself, David and Madhav — were in a car and there was an accident...

Daniel: On one of your weekends away. Your planning sessions.

Rory: One of our weekend trips to plan for the future of Blueprint — and we hit this big fuel tanker, full of the highly overpriced fuel. We're finished. Instant but fiery death. And that's on a Friday. Come the Monday, everyone comes into the office, and no one knows. It's our wives — Sarah, Nic and Ash — at the Monday morning sales meeting, cracking the whip.

Rory: It's genuinely so important, and it's always at the bottom of the list because, at the core, let's be honest about humans: we're egotistical and we're selfish. We're amazing creatures, but that's who we are. So we don't really think we're gonna die — and if we do die, there's no more incentive for us, so there's no incentive to get the will sorted. That's why it's always at the bottom of the list. But with families in place, you wanna make sure they're looked after.

Daniel: Totally agree. This is a big one. Mine hasn't been updated in the last 18 months, and it needs to be. And outdated wills cause so many issues. Disclosure: we can't provide legal advice — we're not legal advisers — but we have clients all the time who end up in disputes or disagreements because the will and the executors haven't been set up properly. Very recently it was the parents. They passed away, and there was no will. Their son was on the title with them, and he said, "The plan was, when they die, I take complete control." But unfortunately there was no will to voice their wishes, so their stake has to be represented and signed off by the other siblings. You have to go to the other siblings and say, "Hey guys, do you agree with your brother taking sole ownership of the property?" They also have to advertise on a legal board to see if any other lawyer had a will in place for them. It's a very consuming process. And let alone now opening up another discussion with the other siblings — did you actually agree to this? Do you wanna make a claim? Because they've got every right to do so.

Rory: Mate, that's a great example, aye. People probably don't realise what's at stake. You've got a young child — or a child of any age — you're sitting on a property, maybe two properties, maybe a couple of big life insurance policies, and something happens to Mum and Dad simultaneously. You've now got potentially millions of dollars worth of assets, kids that need caregivers, and families scrapping over who gets what and who's looking after the kids. It's a nightmare. You don't want that to be your legacy — what you left your family.

Daniel: Especially if it's a blended family. Even more so.

Rory: Totally. There's more risk there, because it's not very clean-cut. If two parents pass and they've got two children, it's very clean-cut. But it's a big one — make sure you've got that sorted. It's very inexpensive to have your will done. If you've got stuff, and you want that stuff to go somewhere when you die, get your will sorted.

Daniel: Less than a grand. It's a less-than-exciting conversation to have, but an important one.

Trap #11 — Financial scams are getting sharper

Rory: This next one's kinda interesting. Number 11 — I had to fight to get this one on the list, man.

Daniel: People didn't see it from your lens. But they haven't seen what you've seen.

Rory: Well, I'm a numbers guy, and I'm also in tune with what's happening across all ages of our economy. This one's definitely more targeted towards our older audience — older taxpayers or retirees — and it's financial scams. Especially online financial scams. The reason I'm so in tune with it is that since running Blueprint Finance, many times now — it must be three or four times over the last few years — older people will call and say, "Hey, there's someone out there representing your business. They're saying they're an adviser or a crypto trader, they've asked for money to provide a financial product or coaching, and then they've ghosted." They're making these fake Facebook profiles and putting their place of work as Blueprint Finance. They can't actually link it to the verified page, so they'll make the spelling slightly off, or "Blueprint Finance New Zealand" — something like that — to falsely represent our company. And then they'll say, "Yep, I'm gonna help you out with this. Here's the bank account. Transfer two and a half grand." It's a big amount of money, but not so big that the full wrath of law enforcement comes chasing after them.

Daniel: And they're selling something, right? There's a promise behind it. Some of these are glaringly obvious — not that sophisticated — but there are some that are really sharp.

Rory: Really sharp. AI and data-scraping tools have given these hackers and fraudsters so much strength. So it's a real threat to our most vulnerable — what we refer to as vulnerable clients. People who are doing all the right things—

Daniel: And may not have their guard up.

Rory: Exactly — they don't have their guard up, and they need to trust their community more. It's actually disgusting that people are taking advantage.

Daniel: And a particular type of scam — you being a romantic yourself — is the romance scam. The elderly, who could perhaps be lonely, and the allure of love.

Rory: This one really pisses me off, because like you said, I'm a massive romantic — just ask Sarah.

Daniel: Big time.

Rory: For people to take advantage of that is just not on. The stats here: romance scams are up 29% in the last 24 months. Scammers and fraudsters understand there are a lot of lonely people out there. They're representing themselves as financial advisers — or crypto advisers, share advisers — then turning the conversation into a romantic one and saying, "Hey, work with me." Or just straight-up representing themselves as someone they're not and asking for money. Sort of like the Tinder Swindler, the famous Netflix documentary, but on a much smaller scale. Just outrageous behaviour.

Daniel: Not cool. So how do we protect ourselves from that sort of thing?

Rory: I think the biggest thing is just talk. I don't think our clients are really gonna be victims of this, but if you're ever doing something that feels a bit unusual, get a second opinion. Because sometimes you've gotta take your head out of it for people to be able to say, "Hey, this is actually a scam."

Trap #10 — Your car loan might be your house deposit

Rory: Coming in at number 10: car loans, mate. When we're going in for bank applications — looking at perhaps investment properties or investing — how do car loans become a trap?

Daniel: Disclaimer: I've had a car loan before. Most people I talk to have had car loans. I don't have one now. But people often don't understand the implications of a car loan if they're looking to do things like buy their first home, or refinance. When I say car loans can be a risk, I'm not talking about buying your modest Japanese car — maybe secondhand, borrowing 10 or 15 grand, paying it off, with a reasonable interest rate. That's totally standard. We all know we should aim to buy with no debt, because a car's a depreciating asset. Where people run into pitfalls is buying new. When you're getting car loans above $50,000, the repayments can be quite large, and that will affect things like your servicing when you're looking to refinance or buy a new property. Often I'll talk to clients who say, "I was trying to do this this year — I didn't actually know my car loan was gonna affect my mortgage application. I wouldn't have bought it if I'd known I wasn't gonna be able to buy a house six months later."

Rory: And there's no way out of it. With that new purchase, it's 30% discounted the moment you jump inside it and drive it off the lot. There's no turning back — you're locked in. You've gotta pay that thing off.

Daniel: Exactly. It's yours. As soon as it's off the lot, famously, you're losing a massive chunk of the value — you can't sell it for what you paid for it. So that's one of the risks. What I'd say is: it's not that you should never use car loans.

Rory: They're not inherently bad, are they?

Daniel: Not inherently bad at all — just something to be really mindful of, based on your financial goals. Talk to your financial adviser before you're taking up that new Ford Ranger. It says here: many people are driving their investment property deposit.

Rory: Yeah — I wrote that one late at night. But at the same time, if you need a bigger car for your family, or for work — look, I'm not gonna bag on car loans too much. That point about driving around in your investment property is just around serviceability, isn't it?

Daniel: Exactly. If you've got a six or seven hundred dollar a month car loan, that could be a top-up on an investment property. And banks are doing awesome incentives for hybrid or electric vehicles — discounted interest rates and better loan terms. That's a big one I'd look into if you've already got the property and you've got some equity. Or even if you're just buying a really cheap electric car.

Rory: Why are the banks so green? I mean, it's great. Even insulating windows and stuff, aye — double glazing. They've done those deals in the past where they'll give you incentives.

Daniel: I think it's because it's improving the value of the property. It's secured by the family home, you're reinvesting in that property, and it means the book value is strengthening — you've done the right things to keep the asset in good nick.

Trap #9 — Fixing for five years can backfire

Rory: Moving on — we're in the single digits now. Fixing your mortgage rate for too long is number nine. But Dan, doesn't fixing your mortgage rate long term give you financial security?

Daniel: Yes, but there are so many things to consider. I get clients who come to me and say, "I wanna fix for five years." And I'm financially conservative — you know me, I'm really financially conservative — but I'm never gonna tell someone that's a great idea without fully understanding their situation first. For example, a friend of mine came to me and said, "Dan, I'm super risk-averse. I wanna fix for five years." And I said, "All right, let's actually have a conversation about it." He's a high income earner, decent equity in the mortgage, and he's super into his investments — he likes to take his excess income and invest it in the share market. He wants that stability: "I know exactly what I've got to play with every month, and I'm not selling this house. I wouldn't even dream of selling it — this is our forever home. The missus might get pregnant in the next couple of years. I value financial security, one hundred percent." Now, this is someone who's talking sense, and I could back the five-year — I wrote the five-year loan for him on the whole mortgage and set him up nicely. Horses for courses.

Rory: That's an excellent example of when a five-year mortgage is suitable.

Daniel: Now, someone else says to me, "I got told to fix for five years, because that's what my dad said — but this might become an investment property in two years." Or, "I might move overseas," or, "I might actually sell the property." All those factors at play can really cause issues, because once you fix that contract, the longer the contract, the bigger the potential early repayment cost if you need to get out of it. The early repayment cost is based on the wholesale rate at the time you took it, what it is right now, and the length you still have to fulfil on the contract. So, for example: you lock in for five years, rates come down slightly, and you wanna break after two years — it's gonna be a hefty break cost. Same if you sell the property and repay the loan in full.

Rory: I wanna pick your brain a little bit on that. The five-year example with your mate really worked out well — sounds spot on. But all eggs in one basket — still a little bit of risk there, aye? What do you think about some sort of a split?

Daniel: I totally agree. The rate at that time was a 4.99% rate, and as a blanket strategy I'm always recommending an interest rate average. Half on the three-year — I was trying to tell him, half on the three, give yourself a bit. But we looked at the historical interest rates, and 4.99 was an outstandingly good rate. We did the numbers together, and he said to me, "Look, I've missed out on the 7%. If it goes down to 3% — which would be a freak thing, similar to the 2019 drop, which we probably won't see anytime soon; the wounds from that are too fresh — my life doesn't really change. But if it goes up, my life really changes." So he did the deal. I showed him both options and he just said, "No, I want the security." He's a man with a plan, strong in his conviction. When we signed it up, I was so happy to do it, because it was a plan I could really get behind — and we can say we left no stone unturned. But to offset that risk, like I said: always interest rate averaging. If you're interested in some five-year term, one hundred percent, I'm not gonna turn you away from it. But what about the three-year rate? What about the two-year rate? Let's get some averaging going and spread that risk.

Rory: You're most commonly doing two interest rates? Two loans?

Daniel: Two to three rates.

Rory: And would you bring in a third typically on a larger loan? What's your threshold — do you have a ballpark?

Daniel: During the recommendation, I try to feel out the customer's risk appetite. If they're really risk-averse, even on a 500K loan we might consider a third split. But I'd say 800K-plus is where we might look at a three-way split.

Rory: Love it, mate. Not a one-size-fits-all, aye?

Daniel: Never. That's why it's such a great job.

Trap #8 — ACC is not complete income protection

Daniel: Moving on down the list — I tell you what, if you're still here, number eight's a doozy. You thought this should be a bigger trap, didn't you?

Rory: Yeah, look, it's certainly a trap: assuming ACC has got you covered.

Daniel: Coming in hot at number eight.

Rory: A lot of people will understand that ACC is the Accident Compensation Corporation, and that it specifically covers accidents. And it's fantastic at that — it does a great job. From income protection to surgeries and physios, ACC provides a lot of coverage. But it should never be relied upon as complete income protection, because it's not. It's only covering accidents. There's no cover for cancer, heart attack, stroke, or anything illness-related. It's a fantastic compulsory scheme that we all buy into, but it comes up in conversations from time to time — people go, "If something happens, I've got ACC." Well, let's be clear about what ACC covers and what it does not cover. You don't wanna fall into that trap, Daniel, and rely on ACC for your income protection.

Daniel: I think when it comes to investing for the long term, home ownership and protection, looking after your income is so important. It funds everything — the car payment, the mortgage, the lifestyle. Everything.

Rory: And we insure so much stuff. We insure our pets. We certainly insure our homes — the banks insist on that — and we insure our contents. Your couch and your rug. But not a lot of us insure our incomes.

Daniel: It is crazy, isn't it?

Rory: People think insurance is a waste of money — not everybody, but some people do — or they've heard bad stories, or they think insurance is a scam: that these companies are doing everything they can to get out of claims. And it's not the case. It just comes down to risk management. The art of the protection is in the balance of costs — and that's where your adviser comes in.

Rory: I'll tell you a quick story pertaining to this. I was fooling around on IRD the other day, doing my own personal tax return and getting everything squared away. And I noticed something interesting. You can look at your last 12 months and go, "Yep, that's what I earned." But look back over the last five years. I thought about the five-year block — what have I earned over the last five years? — and it's a massive number. I'm not trying to say my income's huge; I'm trying to tell the listeners it's crazy to think that's five years of your life. At 30 years old now, if I got sick and couldn't return to full work and had to rely on the government — annualise that five years, and that income just won't be earned. And I think about all that money and go, "Where is it?" I've managed to put a few dollars away, but the rest has been funding my lifestyle and my obligations. People don't realise: that's your biggest asset. Your income. It's gonna produce all the money you need to invest, all the money you need to pay your bills, and all the money to leave a legacy — which, for me, is the most important thing. So a big, big one is people not understanding that if you have an accident at work or in your life, the government's gonna help you out and replace your income — 80% of it. But if anything else happens to you, you're buggered and you're on your own, unless you've got a plan in place with your insurance.

Daniel: That's right. I was talking to someone the other day about their dad, who became disabled fifteen or twenty years ago and lost his ability to earn — and their lifestyle just dwindled. From the four-bedroom family home, downsizing over time to the two-bedroom unit, with no savings. Literally nothing to fall back on, and nothing to retire on. And that's the reality. If you can't earn — you'll survive, but you'll slowly eat away at everything you've built.

Rory: This one should be way lower down the list, to be honest. But it leads into our next point, which we should probably breeze through — again, an insurance one.

Trap #7 — Never reviewing your insurance cover

Rory: Number seven: never reviewing your insurance cover. You're going through life and your obligations are changing. Like yourself — perfect example — 18 months ago you had your first child. I'm sure you did a review and made some changes to your insurance.

Daniel: Oh mate, I was pretty good on that. I haven't updated my will, but I updated my insurance policy pretty quickly.

Rory: Of course you did. This is a big one, because insurance is not a set-and-forget. But that's how it goes, because it's admin — it's on that never-ending to-do list. People just get the annual renewal certificate, premiums are going up, there's a bit of a grumble at the insurance company, but they keep paying it, thinking they're covered. The reality is, you just don't know. The amount of people I talk to who have three, four, five policies they've accumulated over the years — each time they've had a life event, they've picked up another policy.

Daniel: Sort of panic-bought. Stacking the insurance.

Rory: And then — who's your insurer? Don't know. What are you covered for? Don't know. And that's kind of reasonable: you set and forget the cover, but at one point in time you had a robust conversation and it made sense. That's the idea. Then hopefully you've got an adviser who keeps in touch with you and keeps things up to date. But mortgages change — they go up and down — incomes change, jobs change, health changes. We're reviewing a client at the moment who took out a life cover policy. It was a little bit heavy at the time — he got a big BMI loading — and he's since lost weight and been relatively fit for a while now. So we reviewed it, and the terms are way better. Huge savings.

Daniel: Your insurance doesn't usually go down as you get older, so that's awesome. Same cover, for less.

Rory: And things like that are really common. If you've set it up direct — whether through your bank, or maybe you've done something online — you may be missing out on the market. You will be, actually. And that may be to your detriment.

Daniel: Maximum once a year, then? And get a new warrant of fitness.

Rory: You don't need to review it more often than that — sometimes once a year is too much. But every couple of years, sit down with your adviser and look under the hood. That's the process. Our obligation is to reach out once a year and just have a chat. That's the great thing about working with an independent adviser.

Trap #6 — Cheap insurance is cheap for a reason

Rory: And then number six — to complete our insurance trifecta: buying insurance based purely on price. "Geez, that looks cheap." When has that ever helped anyone, including myself?

Daniel: That's right. Every time I go cheap, I just lose. It's like if you went and bought a cheap car — you wouldn't walk off the lot thinking, "Geez, I got a good deal." You know why it's cheap. It's cheap for a reason.

Rory: But this is kind of not about paying more. It's not about going, "Look, I've got a budget of $100 a month. I'd love to spend 200, but I can't afford it." It's more around the product side of things and what's covered. A good example would be trauma policies. Some of these old legacy policies might cover 15 conditions, for example — and the newer ones cover 50. You've got more coverage in terms of conditions, and the policy wordings are better, meaning there's more chance that if you got cancer, for example, it's actually gonna pay the claim. That's what we're talking about in terms of quality of the product. And you might be sitting on a 10% discount. Say your $100,000 trauma cover is 100 bucks, and this premium product's 110 — there's an easy solution: just reduce the cover slightly. What would you rather — slightly less cover, but the net's cast far and wide?

Daniel: I want a guaranteed payout.

Rory: For sure. And when you say to people, "If you had a major head injury, this product over here will pay you a full trauma claim, and this product over here will pay you nothing" — it's kind of a no-brainer.

Daniel: That is crazy.

Rory: So yeah — cheap's not always best. Budget is important; it comes into every single conversation I have. We've reviewed hundreds of insurance policies, and the budgets range from $10 a week to $1,000 a week. Your budget is your budget, and your adviser's not worried about how much you can afford to spend — they're concerned about you being able to afford the policy, and setting it up right, with quality products.

Daniel: One hundred percent. Know what you're covered for. That's why you're the guy, mate — that's why you're the guy in our team.

Rory: You know it.

Daniel: Mate, we're getting into the top five now.

Rory: Top five. We've got through that insurance trifecta — the listeners stayed awake.

Daniel: The listeners have hung on — especially the ones who've already got insurance, saying, "I'm covered. Next."

Trap #5 — Small unpaid debts can become big mortgage problems

Daniel: So we've got a big one here, and in my opinion it's a very big one for anyone who's looking to get ahead financially. These are the sorts of things that will just pull you back and stop you from using all the great financial products we have in place: credit defaults and unpaid debts.

Rory: It's a no-go.

Daniel: Everyone's been there. You get the email — you changed your phone plan, there's an unpaid Spark bill — and you just think, "Oh, I'm a bit tight this month. I'll get to it later." But every direct debit and things like these are subject to collections, and they'll go on your credit report and can severely affect your future financial requirements — say, if you're going for a home loan. It might seem unimportant, but these are the things they look for. Overseas, in the States, you have to build a credit report — you get a credit card and use it, and that builds your credit. That's not at all how it works in New Zealand and Australia and most countries. Your credit report is just referring to your ability to pay things back, and whether you've had any adverse conduct. So if you've never had a credit card or anything in your life, you will have perfect credit. Think about it as a cup: your cup's 100% full if you've never borrowed anything. If you've borrowed something and paid it back on time, your cup's still full. If you've borrowed something and not paid it back on time, it's on your credit report for five years.

Rory: So we start at 1,000, right? There's a score out of 1,000.

Daniel: Exactly, it's out of 1,000. But no one's got perfect credit — I don't really know why. 800-plus is really good. I haven't met anyone with perfect credit, so I'm actually not sure how they're scoring it.

Rory: I'm over 800 at the moment.

Daniel: Are you?

Rory: Yeah — and I've had bad credit. I've been down that road. But we made it back. That was many years ago.

Daniel: When you were a young and sort of reckless javelin thrower. "Take it — I'll pay for that later, mate."

Daniel: So the banks — they're looking at lending you a big sum of money, and they're looking out for defaults.

Rory: And they don't care how big or small?

Daniel: Yes, they do. Unpaid debts under $1,000 are a lot easier to work with — we can sort of mitigate those. Over $1,000: big problem. But I'll preface that by saying, if you have bad credit, chat to an adviser, because there are always options — you just might not get the best option on the market. The length of that default or unpaid amount is also part of the assessment — they actually rank it by duration. If you're late by three days, it's completely explainable: the direct debit bounced, I changed bank accounts, I was on holiday and wasn't looking at my banking. That's completely fine. If it's been six months — big problem. These people would've been following you up, they'll have been calling you. It goes to Baycorp, and Baycorp rings you: "Mate, you owe money." So it becomes avoidance, and it reflects poorly on your character — and the bank's gonna look at it with that lens. I had a client recently — great clients, good income — but the big issue was that it had gone on for so long. The banks were saying, "They would've been contacting him — pay this. Why didn't he pay it?" And as much as you try to mitigate it and say they didn't contact him, it's just his word against theirs. So it's really, really important to have your financial health sorted — especially if you wanna be a homeowner, or if you need access to more credit for something else, like a business.

Rory: But the heart and soul of this pitfall is living within your means, isn't it?

Daniel: One hundred percent. As it always is.

Rory: If you don't need it, don't buy it. The buy-now-pay-laters, and that kind of overdraft lifestyle, where you're always just one month behind.

Daniel: That's right. And here at Blueprint, we're not in the camp that says all debt is evil — the Dave Ramsey approach. You need debt. Debt's a fantastic financial tool to help you get ahead — it lets you take a time machine into your future. But it needs to be used responsibly, and you need to respect it.

Rory: And mistakes are common, aye? Let's be real about it. If you're in this situation and you've got a bit of tick, there's a way out of it. You just need a financial plan around that too.

Daniel: That's right. One hundred percent.

Trap #4 — Stop obsessing over cutting expenses

Rory: Number four. This is a really important one, because it's a mindset thing: hyper-fixating on cutting your expenses instead of increasing your income. We love this one, don't we?

Daniel: It's a huge one. Most people earn wages or a salary, and their income is fixed. So naturally you think, "Okay, I'm getting this every fortnight, I'm spending this every fortnight — I need to get my spending as low as possible so I can save or invest." That's common sense, but it's very surface-level common sense. It is so much easier to make another five or ten grand across 12 months than it is to save another ten grand if you've already cut your expenses. It's just like the energy you burn — there's a basic metabolic rate you're going to spend to live. Same with your spending: you cannot go below that.

Rory: That's right. And no one likes a tight-arse — can I just say that? No one likes a tight-arse, to the point where you're this person who's just frugal beyond sense.

Daniel: Once we're at that level where it's really starting to hurt to cut expenses any further, we need to look at ways to increase the income. And even if it's just increasing it by ten grand — that's going to be a massive percentage of any household's fixed expenses. So what can we do? Side hustles. Can we drive Uber? Can we paint fences? Can we cut lawns?

Rory: Upskill. Ask for the promotion.

Daniel: Yes. Can we focus on what we've already got, and tell our boss we can pick up more hours or more responsibility? Just like we said at numbers seven and eight — your income's your biggest wealth-building tool. That's yourself: how can we leverage more off yourself? Obviously we don't wanna work until we drop dead, but you're not gonna get ahead if you're just doing 40 hours a week for your whole life. That's the truth. You wanna get ahead, we've gotta work more.

Rory: Mate, that's the attitude around this space, eh? The work ethic is important. And obviously budget and live within your means, but don't sacrifice your lifestyle. Don't live off rice and noodles — you're gonna burn energy doing that, it's gonna affect your health and your wellbeing, and you might not enjoy your life that much. Find that right level of comfort and enjoyment, and then use the energy in your spare time to just try and push yourself a little bit more.

Daniel: I totally agree. Like you said, we believe in thrift at our company. You don't have to be driving around in a European car — you don't have to be driving around at all. You just need to make sure you've got good, healthy food, you're taking care of yourself, and you're not skipping those sorts of bills. And beyond that, let's see if we can make a bit more money.

Rory: One hundred percent, mate. And look, I've been stuck in my life — with not a lot of money, and not a lot of ideas or immediate ways, within my realm of thinking, to get out of those spots. But start with the possibility of it. Don't listen to this and think, "I can't," or, "It's too hard," or, "I've got too many hurdles in the way" — because then you may as well just build an ironclad fence around your situation and stay in it. Think of the possibilities. The idea might not be obvious today, but if you just open your mind a little bit, it'll come along. That's what I reckon — it's worked for me. Insurance hasn't necessarily been an easy road, but stay the course, work hard, put in the hours, and the needle moves. We're helping a lot of clients now, and it's really good.

Daniel: Well said, mate. Inspiring.

Rory: Inquire, aspire, retire. Boom. Get access to as much knowledge as possible — knowledge is strength. Use that to fuel yourself, get motivated, push forward, and you'll have a successful career and be able to finish up with a couple of dollars in the bank. Bada bing, bada boom.

Daniel: And that's the thing. Here at Blueprint Finance, all we talk about is finance — but you've gotta get it sorted so it's not the most important thing in your life, so you can actually enjoy your life as well.

Trap #3 — The best interest rate isn't always the best deal

Daniel: Number three: focusing only on interest rates and not loan structure. This could honestly be a number five or a number six, because it's so important — it's your biggest bill. Your mortgage. It's your biggest bill, and people aren't talking about it. I don't need to flog a dead horse here about how your mortgage structure is the most important thing. There are so many ways to set it up to create efficiencies, and I'm not gonna drag on about it, because we've got so many episodes on it. If you wanna know how this applies to you personally, get in touch with any Blueprint adviser.

Rory: People do get a little bit fixated on interest rates, aye?

Daniel: All the time. People think the only thing that matters is getting the best rate — that if I get the best interest rate, the rest of my life will be sorted. And that's not at all the case. A cheap rate now could mean a more expensive outcome later. It's a 30-year mortgage, if you haven't forgotten — or a 20-year mortgage. Understand why it's cheap, understand what other options there are, understand the risks of taking the cheap rate. For example, right now the cheapest rate is a six-month rate — and if you fix for six months now, rates might have gone up further in six months and offset those savings. So many conversations to be had about that. There's so much more to it.

Rory: Structure, aye. That's the key.

Trap #2 — Bank approval doesn't mean you should spend it

Rory: Oh, this is a good one, Daniel — you probably see this a bit. Number two: buying based off bank approval. So you've applied for a loan, the bank's approved you for a million dollars, and you go out and you spend the money.

Daniel: You go shopping for the dream home. This is a big one. Different types of clients have different mindsets about what they wanna spend on their purchase, and lots of people have non-negotiables about where they wanna live and what type of property it is — and that can get the purchase price up quite high. With our strategy sessions, the way we approach it is: first, we identify with the client what the bank will actually approve them for. And I'm happy to say that, because we've got quite conservative lending rules here in New Zealand — the amount they can lend is restricted. It's not just your income versus your expenses and you can borrow the difference; it's tested heavily. Stress-tested, based on a bunch of different factors. So that number comes out, and lots of financially conservative people might see it and say, "That's way more than we ever wanna borrow" — which I love to hear, because it means they've already run the numbers themselves and they understand how much they wanna borrow. And there are always clients pushing to borrow a bit more as well, which is the other side of the coin. So we identify that number first, and then we move on to the loan structure and what those repayments actually look like. This is the part I really wanna focus on. Yes, we can get approved — that's fantastic — but is it actually affordable? What does it look like in reality? What are you living off? What's your lifestyle? And are you willing to make those sacrifices?

Rory: What are you cutting out of your life? The dinners out with friends, the holiday, the weekend away, the concerts — all this stuff.

Daniel: On average in New Zealand, people are spending 50 to 60% of their pre-tax income on housing themselves. That's wild. It's the biggest cost. So we wanna understand: is that what you wanna do? Are you comfortable with that? This is the average. What sort of life do you expect to live? Can you take this risk? What about job security? All these sorts of things. That's the real conversation we have, so people actually understand: is this loan affordable? Because affordability can mean two things — what the bank would approve you for based on the numbers, or what your life is gonna look like. I love having that conversation. It's a really powerful conversation to have with our customers: not "Can you afford this loan?" but "Do you actually want it?" I've met so many people — obviously not the ones we've helped — who've just borrowed too much, and they end up with a bit of buyer's remorse. It's not what it was cracked up to be, this dream of buying my first home — you're living there, but you're not living the life that you were before.

Rory: And unfortunately, paired with this declining house-price market, you can get trapped in — and then you really get the buyer's remorse.

Daniel: Super unfortunate. Obviously, if we look through a longer lens — like any property cycle, 10 or 15 years — historically these properties have come back up in value. But in this last correction, that plus maybe borrowing a bit too much has really put some people in some tough spots. So have a chat to your adviser before you overstretch. Make sure it's all affordable, and make sure you understand the worst-case scenario and you're happy with that as well.

Rory: And the clients that are pushing for more — where's that coming from?

Daniel: I think it's generally families with those non-negotiables I was referring to. For example: we've gotta get into the school zone. Or they want a property that's maybe a land bank as well, so it's a big capital expense. It's generally people with bigger families who are trying to accommodate a big family. And that's a hard conversation to have, because hardworking Kiwi deserve a great home to raise a family in — but sometimes they're just not ready. I've been the one to say, "Look, the bank would approve you, but I don't really think this makes sense for you guys right now."

Rory: And if you didn't see the last episode, we looked at renting and investing versus home ownership. That lifestyle thing is big. Obviously we want people owning their own homes and getting into their houses, but affordability is massive.

Daniel: It's a huge conversation.

Rory: Well explained there, mate.

Honourable mentions — Two KiwiSaver traps

Rory: Mate, before we get to number one, we've got some honourable mentions. Jono — very much a friend of the show — was putting his hand up. He wasn't one of the ones who created the list, and KiwiSaver was left off the table. He was pissed. So we're gonna make a couple of KiwiSaver honourable mentions. The biggest one — which we've seen so many people do, and which is even happening now, with funds down 5% since the start of the year — is panicking in your KiwiSaver and moving to a conservative fund. We love to use this phrase: you're crystallising your losses.

Daniel: You're locking it in.

Rory: Locking it in — and locking yourself out of the bounce that has historically followed, that buying the dip is all about. We're not gonna bang on about it, but if you're a listener of the show, a friend of the show, you should know by now: swings and roundabouts. Declines in funds are just part of life. You need to be exposed to risk to get any form of reward in this life.

Daniel: Growth assets are gonna go up and down, but over the long term, most of the KiwiSaver funds that we recommend have historically averaged a net 10% return. So don't fall into that pitfall.

Rory: And the other big KiwiSaver one was wrong fund allocation.

Daniel: Yes — big one. Massive one. I was chatting to David Chamberlain, one of our team, about someone who'd been in KiwiSaver for years and years, getting near retirement — and they'd been in a conservative fund the whole way. Even in their 40s: always in a conservative fund, never touched it. Like KiwiSaver's no small thing — it's nice to have at the end of the day — but they just weren't understanding the growth vehicle that it is. And we've had Jono on this podcast before: the wrong fund over a long period of time can mean hundreds of thousands of dollars — six figures — just left on the table. And even now, at that point, when you think about what that money could make if it was at that balance — the mind boggles at how much potential money they've missed out on through compound interest. And that's important money — that's money that goes into the years where you're not earning. It's major. So we'll put that one in as number two.

Trap #1 — The number one pitfall is doing nothing

Rory: But we're here. The number one pitfall is doing nothing. It's resting on your laurels, sitting on your hands, waiting for the perfect time, and never taking action whatsoever. And that applies to everything we've talked about — because we've talked about KiwiSaver, we've talked about managing personal finances, interest rates, insurance. It's just inaction. Doing nothing. Waiting for the perfect time to buy a house, waiting for interest rates to do this, waiting till you've got enough time to sort out your insurance policies. Waiting, waiting, waiting — and then it's too late. Life's a game, and if you never get off the bench, you'll never score any points.

Daniel: And you need points.

Rory: You do. You need points to retire — unless you're one of the people in a privileged position where other people can score points for them and give them the points. If you're playing this game, you need to participate. There's nothing you can get without bearing some risk. Risk is the most important thing in the money world to understand: you must be exposed to risk to get any benefit from playing this game. So as soon as you understand risk, you can address that idea in your head that says, "I don't want to do these things, because it might go wrong." You need to understand that, based on the long-run numbers, it has worked out over time. You just need to pick the best possible option — the best vehicle for yourself — and give yourself the best chance of success, based on all the knowledge you can get access to. Knowledge is strength.

Daniel: Yeah, that's right. And you can't necessarily tick all the boxes in one sitting, but have a little plan. Everyone has got one thing on their list — the most important one — that they know they're kicking the can on. I've got one, and I've kicked the can on things before: getting the will sorted. I need to do it. And now that we've had this conversation, I'm going to talk to Sammy. Give me a couple of weeks, mate, because it's an important one — who's going to raise our child?

Rory: We'll do a follow-up.

Daniel: I'll do it.

Rory: I know you will, man. You're a man of action.

Just start

Rory: Our biggest hope is that folks can listen to this entire podcast and just take one good takeaway from it — one thing that can make a positive impact on your life. And if number one — doing nothing — is the one you tackle, I'm the most happy. Because if you can solve one of these problems, or if you can start investing, or if you can open that joint savings account towards your home deposit — these are massive things. Life's all about momentum. Just start.

Daniel: Just start. One hundred percent. And book a call with a Blueprint Finance adviser. If you're not sure, have a chat — no obligations. And if you think you're ages away, we don't care. We bloody work for free, you know what I mean? We're just here taking calls, and we want to help. We'll get paid eventually if we help you, even if it's five years away. We don't care. We want to have a chat.

Rory: You just need to get the momentum going, and everything else will take care of itself. Just start. And once you get rolling, it's so much fun. Having stuff is not fun — getting stuff is fun. Putting yourself in a better position is fun. It's something to be proud of, and it gives you life purpose. So do something.

Daniel: Do something. Powerful stuff, mate.