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Chapter 1: How is the Iran war impacting fuel prices?
The Iran war has had a huge impact on your money, and it's so far from over. Even when there were these ceasefire talks in the air, and that already seems to be over. But even if it all ended today, I hate to tell you, the financial damage already in motion, and it goes on. way beyond what you're seeing at the petrol pump.
It's your groceries, your job, your mortgage, your investments, your KiwiSaver. And today we're going to dive into all of them. Now look, you can't control everything. You certainly can't control whether a ceasefire holds or what happens in the Strait of Hormuz or what the Reserve Bank does next. But you absolutely can control everything.
some parts of this and it is so worth taking control of the parts that you can. Because taking action, times like this, even small action, doesn't just ease the financial pressure. I mean, we want that too, and we will because money is tight for everyone right now, and it's about to get even tighter. But it's also about giving you back a sense of control.
And that alone is also worth something when everything is feeling so uncertain. So... We're going to take back our own agency and control to stop letting madmen make our lives harder than it needs to be. So welcome to Making Sense. It's the podcast for people who want financial freedom without giving up their coffee.
I'm Frances Cook, a financial journalist and fellow financial freedom seeker who makes money simple for you. Let's get into this. First of all, pain at the pump. So we're going to start with the most obvious, the immediate one, transport, and how that impacts everything. The one you feel every single time you pull up to a petrol station, and that also ends up rolling into, well, everything else.
Now, bear in mind, I am recording this about a week ahead of when it's going to be released. We need some time to edit it. But these figures should be generally right. I've tried to make sure that what we're talking about shouldn't change too much. Not to jinx it, considering... how unpredictable this whole situation is, but this should be generally right.
So, petrol prices are up 43% since this all started on average, and that is a whopper in just a few weeks. Now, diesel, worse. Some operators are saying prices are up 110%. We were driving back from a little Easter weekend away with the kids, and they were both asleep in the
Both my husband and I, every time we drove past a petrol station, just hissing at each other and nudging each other as we're driving and seeing these prices going over $3.70 everywhere. And since then, it's worse. The diesel price is actually a much bigger problem because diesel is how we move around freight and how farmers do things like power the tractors that harvest our food.
And it's actually far more central to our economy than petrol. But we will come back to that. The issue is that whether or not a ceasefire holds or whether it gets worse and the U.S. keeps blockading Iran... It doesn't really matter. I mean, it absolutely does matter in that I hope people can be safe and the bombing stops. Don't get me wrong.
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Chapter 2: What are the broader financial implications of the Iran war?
Next one, check your tire pressure. This takes two minutes at any petrol station. It's totally free. And under-inflated tires can increase your fuel usage up to 3%. So again, free money. Go get it. Combined trips. This makes sense. If you can have one trip cover two things, then great. Obviously you're saving. But also a cold engine uses more fuel for the first few kilometers. Fun fact.
So if you're combining separate errands, then you are saving yourself those extra cold starts. Instead of three different cold starts, maybe you've just got one loop, same errands, less fuel. Also a really good time to have the work from home conversation. I know some employers have become touchy about this one. They've
Obviously, keep these conversations friendly and productive, but you still need to have the conversation. Even just one or two days a week, that could change your numbers in a big way. If you're doing a 30-minute commute every day, five days a week, changing that to be just three days a week, and then you're saving 40% of your commuting fuel costs, I mean, that's massive.
If you could save 50 bucks just by having a conversation, wouldn't it be worth it? I also have a little public transport hack for you. This one is wild. I hadn't heard it before. It came up in the webinar that we had a couple of weeks ago. Iran, oil and your money. So that is up now on both the YouTube and the podcast channels. If you missed it, it's got so much in it.
Dean Anderson from Kernel put me onto this one and it's called Extraordinary. You can find it at extraordinarypay.com. IRD approved way for you to pay for public transport from your gross salary, as in you basically get a tax cut from using public transport. I don't know. I kind of love this and I feel like it's a really easy win.
Your employer does have to help you set it up, but it doesn't cost them anything. What an easy win for them to give you. Someone on the medium income, rough figures, it could save you maybe $500 to $700 a year. So run, don't walk to talk to your HR office about this. Right. Part two, the price of your plate. Moving onwards to food.
This one is pretty interesting because there are two different food stories playing out right now. Most people have only heard one of them. So first stop, a horrifying number to get you going. 93% of all products in New Zealand are delivered by truck. That's research from the University of Auckland.
So basically, every single thing on supermarket shelves get there on the back of a diesel-powered vehicle. And We talked about this earlier, right? Diesel, just about doubling in price. That cost goes somewhere. Where does it go? It goes onto the shelf price of the things that they were moving. And food inflation was already looking pretty gnarly before all of this hit. StatsNZ had a
basic inflation number of 4.5% in February before all of this hit. And it was particularly hitting meat, poultry, fish, eggs, dairy. So all of those were up way more than that standard inflation number. The meat was 7.5%. The dairy and eggs was 9.9% inflation. So awesome. Good luck with your healthy eating team.
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Chapter 3: How will rising fuel costs affect grocery prices?
a little bit mad. So there are options here. We don't need to get stuck in this doom spiral. We just have to use the information that we have. Once again, start by using your consumer power first. That is using your wallet to vote. So then you will not only be putting pressure on the short term, also the long term, saves you a little bit of money as well. So use price comparison sites.
The best ones that I've come across are grocer.com or Price Pulse to price compare between supermarkets every time you shop. These websites, these apps make it really easy and quick to do it. Someone told me recently they saved $80 on a single shop. just by doing this. So $80, I would absolutely take that. You can also buy direct from farmers. There's sites like outthefarmgate.co.nz.
There's also food co-ops. This is a really smart idea. This is when people team up together to bulk buy direct from wholesalers, and then they split the order between members. Really smart. You can find these co-ops all over the country. I found a bunch of them listed on organic and Zed.
But honestly, I think if you just Google food co-op and then the city that you're in, a bunch of options should pop up. And it's power of the people, my friend. We've got to use it at times like this. We've got to team up together. Mints. wildly expensive.
So if you are someone like myself who tries to keep your protein levels high enough, maybe get used to a few protein swaps because protein is really being hit by this. Things like mince might get swapped out for things like chicken and pork. Buy seasonal produce too. It's traveled less, so it's more abundant. It's cheaper.
Right now in autumn, that's things like your brassicas, broccoli, cauliflower, cabbage, or root vegetables like kumara, pumpkin, This is a great tip, actually, that I got from Michael Garvey on the recent episode where we were talking about the cost of food, right? Where she said you can swap things within the same category, you know?
So you can swap one leafy thing for a different leafy thing that's in season or one root vegetable for a different root vegetable in season. If you're struggling to make swaps that you can find cheaper... That's a good way to do it. Think about the food category that it's in. I thought that was really smart.
I think the really important thing is we're all going to have to get ourselves off autopilot buying things and be a little bit smarter about how we do this and how we price compare and about how we look around. If you have any outdoor space at all, now is actually a good time to be smart about growing some of your own food. And I know that sounds very 1970s.
I know there has been a trend recently to say, stop telling us to grow our own food and it doesn't actually work and it's not actually all that cheap. I know, I get it, I get that it's annoying. The numbers stack up more now than they ever have before and we've got to do the things that we can.
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Chapter 4: What is the connection between fertilizer costs and food prices?
Calm, deliberate and spread over a few weeks. A buffer of things that you actually eat, can stock up on and then Rotate through. Now is actually a really good time to be doing that. Rice, pasta, cans of chickpeas, canned tomatoes, canned fish, frozen vegetables. The money case for doing this now is simple. Food prices very likely to keep going up.
especially through the second half of this year, back half of 2026. Buying staples now at current prices before the next wave hits is probably going to help your future grocery spending. I am also still concerned about the possible impacts on shipping and possibly shortages if things continue getting worse again. And that is just a back of the mind concern.
I'm very much a hope for the best, but plan for the worst type of girl. I'm not trying to freak everyone out, but I just think I've been reading a lot of analysis and I do think shortages are a possibility, not a certainty, but just a possibility. that I don't want to leave myself open to.
Bottom line with food, I think you just need a plan and a strategy because the next 12 to 18 months could be rough on food prices and certainly very unpredictable. And you want to put the systems in now to reduce how exposed you are to that price cycle. Now, not all of those suggestions will work for everyone, but if even one of them does work, we can't stop eating.
So anything we can do to try to stop the food squeeze, major savings. Okay, onwards to the things that can make you money. And I'm starting with your job because it's an extremely tough job market out there. This current situation does not really help. The Reserve Bank, when they put out the latest official cash rate, all the headlines like to focus on, okay, what's the new interest rate?
And that's all fine. Okay. Yep. That's the big thing that's changed. But the new interest rate is not what my focus is when I'm looking at this. I look at the report that they put out alongside it because it In that, they lay out basically the top economic minds in this country get together and decide on what are the biggest risks and opportunities in the country right now.
And then they just put it all out in a report for us alongside these interest rates. And buried in the latest one, there is a warning about your job. We already had our economy not doing great, unemployment up, and the business environment not doing so great, people not spending much because they don't have as much money. And then this hit. The Reserve Bank is now saying, hey, watch out.
Unemployment could go up more because businesses are facing the same things as the rest of us are. Higher fuel costs, higher costs for other things because of that underlying fuel cost pushing up the price of everything. And their customers don't have much money right now, so they can't really put their prices up to get those costs up.
So their profit is under pressure, which means they look to cut other costs, which can then sometimes turn into stuff. Now, we're not there yet. I really don't want anyone to panic. I just think, once again, it's getting prepared and being smart. So take control, take action on the things that you can. What do you do then?
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Chapter 5: What practical steps can individuals take to manage transport costs?
Next, your mortgage, because I have been getting so many DMs about what on earth is coming next with mortgages. Starting point, the latest interest rate news, the Reserve Bank kept the OCR at the same level, 2.25%. And the headlines went, cool, no change to interest rates. All good. Moving on.
Which is not quite right, because like I say, I like to dive into the statement that they release alongside that. And I'm sorry, but some of the wording in there was not as chill as the headlines would suggest on this one.
As I mentioned, the inflation that they are expecting to come for the cost of living, they're thinking that's going to be over 4% by June, which is only a couple of months away. And it's well over that 1% to 3% inflation that they aim for. And so they're saying probably 4% by June, maybe more. And then there's this quote there.
I'm going to say it word for word because it's really strong wording from such restrained financial nerds, said with love. But they said, if inflation keeps going badly, keeps increasing, then they said, quote, decisive and timely increases in the official cash rate would be required. So decisive and timely, that is basically central bank speak for we will move fast and we will move hard.
And if we need to, we'll get this done. So they didn't yank interest rates up this time, but they talked about it. And the wording that they're using shows that this is not a everything is fine, no drama kind of holding steady. This is a we're watching very carefully and our finger is getting close to the button kind of hold. It's the kind of hold where they say there's no good decision here.
So we're holding steady for now, but we might give the whole economy some really rough medicine if we have to, because that's the best of a bunch of bad decisions. And banks, the normal banks that you and I use, you've got the central bank that's making these decisions, and then you've got what's called the retail banks. Those are the ones that you and I get mortgages and savings accounts with.
Those banks... then watch the instability around the world. And they hear that from our central bank and they often move the long-term rates up anyway, because they're thinking not just about what should interest rates be now, but what they're going to be soon. They're trying to make long-term business decisions. So they see that and some of your five-year mortgage rates start moving up.
And ANZ, our biggest bank, is now predicting there will be three interest rate hikes before the end of the year, starting from July. Now, I do think that the ANZ team tends to be the most pessimistic of the bank analysts here in New Zealand. They often are the ones to sound the alarm first. But that doesn't mean they're wrong. I have huge respect for their team.
It's just, you know, a pinch of salt before we panic. It is worth noting that while still paying attention to what they have to say. Anyway, what does all of this mean practically? If your mortgage is coming up for refixing soon, do not assume that rates are going to drop the way that they were earlier this year. That picture has genuinely really changed now. The direction of travel has changed.
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Chapter 6: How can you secure your job in an unstable economy?
But that doesn't have to send us into a tailspin about our investments. To be honest, this section actually worries me so much less than the previous stuff we talked about. The petrol, the food, your job, your mortgage, all of that came first because if people dip out of this episode early, I think those are the big ones that they should be thinking about now.
Whereas if you're wondering whether the current situation means you need to change anything for your investments, probably not. Here's what I want you to think about. is this a change that will stick around? Or is it a scary blip? Because we're seeing signs of a structural change here underneath all of this crisis. There are signs that this could lead to other changes.
And you could factor that into your investments if you wanted to. This could be For example, a moment that accelerates the world away from being dependent on oil in a way that creates new winners and losers in the coming years. And if you find that argument convincing, then maybe you might want to change a few things. And we are seeing signs of that in New Zealand. Really interesting.
Electric car registrations up 400% in just the last month. Sales of plug-in hybrids up over 300%. And people are far more interested in things like getting solar on their own homes. Meridian's solar registrations up 214%. People are not waiting for someone else to solve this. They are making the shift themselves. But then... Maybe you think it's a blip.
Maybe you think the straight will be opened again and everything will go back to normal, in which case then the argument is you just sit tight. The question for investors isn't just how do I survive this? It's am I positioned for what comes after it? I don't want you to ever think about your investments in terms of the next few months.
I want you to think about it in terms of the next five or 10 years. That's where the real money is. So what do you actually do with your money right now? If you think that this is the beginning of a change, then maybe a slow, steady change to your investments could be the right call for you.
Another example is that some people think that this could mark the beginning of the end of America's dominance over the global market. And some people think it's the beginning of a green revolution with advances for renewable energy and electric cars. And some people think neither of those things are true, that it's a blip and everything will continue.
If you do think it's the beginning of a change in whatever direction, then I don't think that means you need to do something drastic like selling everything.
And selling while the market is in chaos is usually a bad idea. Even if you have really good reasons, it is usually a recipe for losing money. But you can do things like tilt instead. You just change where any new investments go.
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