28 terms
NZ money words, in plain English
PIE tax, on-call, RWT, LVR. The words banks and providers use without explaining, defined the way you would explain them to a friend.
Banking8
Open BankingA system that lets you securely share your bank data with third-party apps via APIs. In NZ, Akahu provides open banking connections to all major banks. You control what data is shared and can revoke access anytime.Read moreDirect DebitAn automatic payment where a company takes money from your account on a set schedule. Used for power bills, phone plans, insurance. You authorise it once and it happens automatically.Read moreAutomatic Payment (AP)A payment you set up yourself to go out automatically on a schedule. Unlike a direct debit (which the company controls), you control the amount and timing of an AP.Read moreTerm DepositMoney locked in a bank account for a fixed period (3-12 months) in exchange for a higher interest rate. You can't withdraw early without a penalty. Good for savings you won't need soon.Read moreOn-Call AccountA savings account where you can deposit and withdraw money at any time. Lower interest than term deposits but instant access. Good for emergency funds.Read moreEFTPOSElectronic Funds Transfer at Point of Sale. The system that lets you pay with your bank card at shops. In NZ, EFTPOS transactions are usually free (unlike credit card fees).Read moreCheque AccountNZ term for what Americans call a 'checking account'. Your everyday transaction account for spending, receiving salary, and paying bills.Read moreOfficial Cash Rate (OCR)The interest rate the Reserve Bank of New Zealand sets to influence inflation and the wider economy. When the OCR drops, mortgage rates and savings interest both tend to fall; when it rises, both go up. The headline rate banks watch most closely.Read more
KiwiSaver6
KiwiSaverNew Zealand's voluntary retirement savings scheme. You contribute a percentage of your salary (3.5%, 4%, 6%, 8% or 10%), your employer contributes at least 3.5%, and the government adds up to $260.72 a year. Money is locked until age 65 (with exceptions for first home and hardship).Read moreKiwiSaver First Home WithdrawalAfter 3+ years of contributing, you can withdraw most of your KiwiSaver balance to buy your first home. You must leave $1,000 in the account.Read moreFirst Home GrantClosed. The First Home Grant stopped taking new applications on 22 May 2024 and is not returning. It paid $3,000-$10,000 per person to first home buyers who met KiwiSaver contribution and income tests. The KiwiSaver first-home withdrawal and the First Home Loan are the schemes that still exist.Read morePIE TaxPortfolio Investment Entity tax. The tax rate on your KiwiSaver and managed fund returns. Your rate depends on your income: 10.5% (under $14K), 17.5% ($14-48K), or 28% (over $48K). Set it correctly to avoid overpaying.Read moreConservative FundA KiwiSaver or managed fund that invests mostly in bonds and cash. Lower risk, lower returns. Suitable if you're close to retirement or plan to withdraw soon.Read moreGrowth FundA KiwiSaver or managed fund that invests mostly in shares. Higher risk, higher potential returns. Suitable for younger investors with 10+ years until they need the money.Read more
Budgeting5
Safe to SpendYour available balance minus upcoming bills and savings commitments. It's the amount you can actually spend without going into the red. Steady shows this number on your dashboard.Read more50/30/20 RuleA budgeting guideline: 50% of income on needs (rent, food, bills), 30% on wants (dining out, entertainment), 20% on savings and debt repayment.Read moreZero-Based BudgetA budgeting method where every dollar of income is assigned a job (expenses, savings, or debt). At the end of the month, income minus allocated amounts = zero. YNAB uses this method.Read moreEmergency FundSavings set aside for unexpected expenses, car repairs, medical bills, job loss. Most experts recommend 3-6 months of living expenses. Keep it in an on-call savings account for instant access.Read moreSinking FundMoney set aside for a planned future expense, holiday, Christmas gifts, car registration. Unlike an emergency fund (for surprises), a sinking fund is for things you know are coming.Read more
Investing4
ETF (Exchange-Traded Fund)A type of investment fund that trades on the stock exchange. Holds a basket of shares, bonds, or other assets. Popular in NZ via platforms like Sharesies, InvestNow, and Hatch.Read moreManaged FundAn investment fund run by a professional fund manager who decides what to buy/sell. You invest money and the manager does the rest. Higher fees than index funds but potentially higher returns.Read moreIndex FundA type of fund that tracks a market index (like the NZX 50 or S&P 500) rather than trying to beat it. Lower fees than managed funds. Warren Buffett's recommended approach for most people.Read moreDividendA payment made by a company to its shareholders, usually from profits. In NZ, dividends come with imputation credits that reduce your tax. Some investors build portfolios around dividend-paying stocks.Read more
Tax3
RWT (Resident Withholding Tax)Tax automatically deducted from your bank interest and dividends. Your bank withholds it before you see the money. Rate depends on your income (10.5% to 39%). Check your rate is correct with IRD.Read morePAYE (Pay As You Earn)Income tax deducted from your salary by your employer each pay period. Most NZ employees don't need to file a tax return because PAYE handles it.Read moreTax CodeA code that tells your employer how much tax to deduct from your pay. Most people are on 'M' for their main income. A second job takes one of the S codes. Wrong code, surprise tax bill.Read more
Credit2
Credit ScoreA number (0-1000 in NZ) that represents your creditworthiness. Based on your borrowing history, repayment patterns, and credit applications. Check yours free at Centrix or Equifax NZ.Read moreBuy Now Pay Later (BNPL)Services like Afterpay, Laybuy, and Zip that let you buy now and pay in instalments. No interest if you pay on time, but late fees add up. Counts as debt and can affect your credit score.Read more
Understanding money is the first step
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