Financial Goals - How Much Should I Save In NZ?

No two people are alike and this is reflected in how people save money and plan their finances. One person may prefer to spend their money on travel, another on their home, and yet another saving for retirement. There is no single right answer, so these are all valid reasons to save and each choice will determine how much money they need.

How much a person should save comes down to their goals and how much money is needed to reach them. A good rule of thumb is the 50/30/20 rule, with 50% of your monthly budget for essentials like rent and food, 30% for discretionary spending, and 20% for savings.

Whatever your financial goals, you’ll be glad to know that there’s a path to realise them. The team at MyFuture can help you craft a financial plan that takes into account your short term, medium term, and long term financial objectives.

What Are Your Financial Goals?

Knowing how much to save starts with knowing what you’re saving for. In addition to knowing how much you’ll need to save, it’ll also serve as motivation to save, knowing you have something to look forward to.

When identifying your financial goals, you can break them down into three categories:

  • Long term financial objectives – more than 10 years ahead; retirement is the usual long term savings goal, but it can also be a child’s education, or building your dream home.
  • Medium term financial objectives – what do you want to achieve in the next 5-10 years? Do you want to buy a house or start a business?
  • Short term financial objectives – what do you want to achieve within the next 5 years? Pay off your debt, fix your car, or go on a holiday.

What Is The 50/30/20 Budget Rule?

Once you have determined your list of financial goals, you can look at each goal individually and break it down. The 50/30/20 rule works for a lot of people in this scenario. A simple way to split your spending habits into three categories:

  • Needs – for those basic and unavoidable necessities such as paying the rent and bills, buying food, and paying transport costs.
  • Wants – for those little pleasures in life like eating out, luxury items, travelling, and socialising.
  • Savings – for those all important future plans or as an emergency fallback.

Generally, around 50% of your income goes towards your ‘Needs,’ while you work to limit your ‘Wants’ spending to 30%, so the remaining 20% can go into ‘Savings.’

Of course, this is only one way to approach your savings plan. The right savings plan will ultimately depend on your very unique situation and goals. Our philosophy at MyFuture is that it’s all very well to create wealth, but you have to be able to enjoy your life along the way – so we aim to help you achieve your goals, without you having to limit your ‘wants’ too much.

How Much Should I Save?

To answer this question accurately, you will have to break down your financial goals and realistically determine how much you can put away.


Starting with the big one, if you’re aiming for your dream retirement, at least 10-15% of your income would be a good place to start saving. Don’t worry if that sounds scary. If you have an employer that matches your retirement savings, saving just 5% might get you to 10% just like that.


An emergency fund can support you in case you lose your income or have unexpected life circumstances. This fund can come in handy and take a huge weight off your shoulders. An emergency fund should ideally cover between 3-9 months of your living expenses.

Before you panic, assume that you would cut out any luxury spending such as dining out or new clothes and calculate your monthly costs of basic living expenses. How much would you need to survive? If you save just half of that amount each month for a year, you’ll already have a six-month emergency fund.

Other financial goals

For every major expense you anticipate within the next decade, create a timeline and categorise them under broader headings such as:

  • Family
  • Holidays
  • New Car
  • Assets
  • Investments

With your savings goals in mind, it’s easy to break down the time remaining to see how much you’ll need to save each month.

While this exercise may dim your enthusiasm for some dreams, it will help you to understand how realistic they are and how you can follow a beeline to achieving them. You might need to adjust your goals to make them more achievable or lengthen your timeline. Other options to increase your chances of reaching your goals include cutting your current spending or being more aggressive with investments.

Get Ahead With Quality Financial Advice

Our Qualified Financial Advisers can help you achieve your savings goals with a tailored financial plan and proven financial expertise.

How Much Do I Need To Save?

Financial independence may seem like an elusive goal, but it is certainly attainable. Various strategies are utilised to build wealth and achieve financial independence into retirement, each with their own strengths and weaknesses. There are two main ways to approach this:

The Simple Way

The more traditional way would be to take into account how much you are comfortable living off on a yearly basis and subtract the amount you would receive from your pension. As of the time of writing this your Superannuation fund pays out $24,000 for an individual over 65 and $36,000 for a qualified couple. If you are used to living off a household income of $100,000 and minus the amount obtained by your pension, then you will need to save an extra $64,000 for each year of your retirement.

As a rule of thumb let’s say you live to the average life expectancy of 85, you will need to save for 20 years of retirement which gives you a total of $1,280,000 you will need to accumulate by retirement age. This may sound simple enough, but there are some detrimental flaws in this approach:

  • If you live past 85, you will need to rely solely on the $36,000 pension and need to drastically reduce your quality of life.
  • You may have to become dependent on your children or other family members to get by.
  • This approach leads people to live frugally with the fear that their retirement funds will run out before they do.
  • It also doesn’t take into account the effects of inflation on everyday items.
  • If your funds are sitting in savings, the interest and tax paid on this will mean your savings are slowly losing value.
  • You’ve lost a wonderful opportunity to leave any kind of legacy or future help to your family members.

The MyFuture Way

The second approach is the one we take at MyFuture. Changes to the government pension is inevitable, and the likelihood of receiving less, at a later age or none at all is an unfortunate possibility. For this reason, we don’t rely on the government pension in your financial planning at all. On top of this we take into account the rate of inflation.

So let’s take a look at the process. If you are 40 now and assuming you want to retire at 65 you have 25 years to save. Let’s assume a 2% inflation rate between now and then, your $100,000 will need to be $164,000 to give you the same spending power as today.

This is a more realistic retirement fund to aim for:

  • With a robust financial plan in place a conservative risk profile should give you around 6% return on your investment during retirement.
  • This means that you should aim to accumulate $2,700,000 in investment assets between now and retirement.
  • When you retire you can live off your return on your investment alone, giving you $164,000 a year regardless of how long you live.
  • The government pension in this scenario is an added benefit not a reliant and if the government does change anything between now and then you’re still financially secure.

In this approach because you’re living off your ROI you won’t even need to touch your 2.7 million nest egg itself. If you live to 105 years old you’ll still have your millions which if it’s not needed can then be passed on to your loved ones.

To learn more about how to create your wealth and invest it wisely, our Qualified Financial Advisers at MyFuture can work with you to provide guidance on age-based savings and investment plans that can help you reach your financial goals. Get in touch with us today for a FREE no obligation Discovery Session.