Among my more financially successful clients there are a number of habits they tend to share, these include:

1. Starting well

Their first house is typically brought with a reasonable deposit, therefore they enter into a mortgage with good saving habits already established. They also tend to buy within their means. Usually what they end up borrowing is a lot less then what they could actually borrow (according to bank calculators).

2. Maintaining a surplus.

At the end of the month there is typically unspent money in their accounts, this can then be used against their mortgage meaning they are able to avoid vast amounts of interest cost. This is a key factor in avoiding having mortgages for 20-30 year terms

3. Avoiding short-term debt.

There are 2 components to this; firstly financially they avoid the high interest cost of short term debt. Secondly there is a mindset of ‘if we cannot afford it we won’t have it (or wait until they can afford it)’.

4. Reviewing circumstances

“should we” versus “I need”. When my existing clients come in for extra funding the conversation is usually 1 of 2 options. The first is “we need to borrow $x”. The second is “we are considering spending $x on y, how does this change our plan”? So my successful clients will usually check the waters first before diving in. This allows them to be financially comfortable with a decision before going ahead with it. This is a lot less stressful than financially committing to something and then trying to make it work.

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans