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Money Expert - Diana Clement - Financial Planning, Career, Investing, Economy, Property - MSN NZ

The budget and your back pocket

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For most of us what matters about the Government's debt-busting budget is how it affects our back pocket. It has implications for both singles and families.

If you were looking forward to tax cuts to ease your own personal finances then you'll be sorely disappointed. National promised tax cuts in the election. Some of that money (around $18 a week for workers earning $50,000 a year) came through in April, but the rest (another $12 on average over two years) has been scrapped. What's more, a planned increase of $5 a week for independent earners is no more. But at least there are no tax increases.

Personal finance implications at a glance:

One of the big problems for the average person that the budget hasn't solved is the number of people joining the dole queues — up to 70,000 by the end of next year predicted. According to Labour leader Phil Goff that was 1250 more people last week alone. Losing your job is one of the most financially catastrophic things that can happen for most people.

The deficit announced by Minister of Finance Bill English is the first in 15 good years and he's not expecting another surplus until the year 2016. The problem is two-fold. There is less money coming into the government's coffers as unemployment rises and businesses struggle. Add to that the rising cost of paying unemployment benefits: due to cost $2.5 billion more over the next four years.

One piece of good news for anyone who owes money on loans or a mortgage is that international ratings agencies Standard & Poor's and Moody's have upgraded the country's credit rating. Had it been downgraded, you and I would have ended up paying as much as 1.5 percent more on our interest rates.

More than 180,000 home owners are set to benefit from a $1300 grant for insulating homes built before the year 2000. There is also a $500 payment available towards low-pollution heating such as heat pumps and wood pellet burners. Neither grant is means tested.

The Government's announcement that it would suspend payments into the New Zealand Superannuation Fund bought some consternation from retirees and baby boomers due to retire over the next 10 years. But the Retirement Commission responded very quickly to explain that this wouldn't affect pensions.

The fund was designed to ensure the government had money to pay for pensions in the long term. Money is found from the budget to pay pensions regardless of the fund.

The good news for pensioners is that the government has guaranteed that the national superannuation payments themselves will be fixed at 66 percent of the average wage.

Labour said it was generations X and Y who would suffer from the suspension of payments.

Some of the less headline-grabbing changes in the budget will also affect us. Although there's more money going to prisons, money for training and apprenticeships have been slashed.

Full budget 2009 coverage

What do you think of the budget? Will it have a big impact on your life and family?

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