Applying The Barefoot Investor in NZ - 2025 UPDATE
03 Aug, 2025
The content I’ve created on applying The Barefoot Investor book to New Zealand remains some of the most regularly viewed on The Happy Saver.
Collectively, the five blog posts I’ve written about The Barefoot Investor (BFI) have received close to 100,000 views:
4 Dec 2022 - Book Review: Barefoot Kids
8 March 2020 - Applying The Barefoot Investor in NZ - UPDATE
21 Oct 2018 - Book Review: The Barefoot Investor for Families
23 Dec 2018 - Applying The Barefoot Investor in NZ
27 May 2018 - Book Review: The Barefoot Investor
Author Scott Pape’s “I’m just trying to help, not sell you something” simple financial approach resonates with Kiwis. I continue to gift his book to others because I believe it’s a perfect guide to getting on top of your finances. If you were to combine his book with Rebel Finance School’s free online course, you could pretty much call yourself “financially literate.”
Since he remains so popular, it's time for me to update the March 2020 blog post I wrote, titled “Applying the Barefoot Investor in NZ - UPDATE”
I’ve decided it was time to make a few updates to it, so that all those people reading the book for the first time, as well as those following along with The Barefoot Investor principles, have a reliable New Zealand resource to turn to.
The Barefoot Investor has been instrumental in changing the financial direction of not only Australians but also Kiwis. To write this blog, I reread his book, and it’s like getting a shot of motivation. If you haven't read it, do so; this blog post is aimed at people who have read his book—or intend to. In the book, he provides detailed information about which accounts to open, insurance to use, and so on, and he includes the specifics that many other personal finance books often gloss over; they frequently fail to provide the practical details of which companies to use. However, there is a caveat when reading it, because, being Australian, many of the banks or providers he recommends checking out do not exist in New Zealand, and the Australian tax system is different from ours.
Many people have asked me to determine the Kiwi equivalents of the providers he recommends. It has not been an easy task. With so many institutions vying for our money, our debt, our retirement savings and our insurance, it’s a minefield! I’m not saying this is a conclusive list, but I’ve given it my best shot. Chris, in this MoneyHub article, also offers his suggestions.
However, you may have specific details to add; please include them in the comments section. Additionally, to help you interpret it in a New Zealand context, there is a non-affiliated Facebook group called “Following the Barefoot Investor - New Zealand,” where you can ask questions of group members.
Also, please note that this post, and the content I link to, is not endorsed by Scott Pape. Plus, I’m not an authorised financial advisor; these are just my opinions. Do your research, learn from mine and others, and go forth and implement BFI in Aotearoa!
Let’s start with a bit of an explanation...
Now, I don’t know about you, but I found myself flicking back between the pages of the book KNOWING that he was proposing a ‘simple’ strategy, but struggling to work out my BLOW from my GROW and my MOJO. Confused? You bet I was. So here is my breakdown for you:
Let’s start with the basics:
The Barefoot Investor proposes three different overall “buckets” that you will split your income across:
BLOW - Used for all the things you need to run your daily life: electricity, food, transportation, etc.
MOJO - This is an emergency fund, basically.
GROW - This is where you are going to build your long-term wealth, and you really start to focus on this bucket once you have cleared all debt first.
Coming under your BLOW bucket are the following accounts:
Account 1: DAILY EXPENSES - An Everyday Transaction account with an ATM debit card (Pape is anti credit cards, as am I). Your income is deposited into this account and then split off. 60% of your income stays here to cover your daily expenses (rent, power bill, food, etc.), and the plan is that you keep these expenses as low as possible.
Sub Account 1: Smile - Online Saver Account linked to Daily Expenses - 10% of your income is automatically transferred here for long-term savings goals, such as a holiday, a new computer, a new roof for your house, or updating your car.
Sub Account 2: Fire Extinguisher - Online Saver Account linked to Daily Expenses - 20% of your income is automatically deposited here, and this money is for combating financial fires, such as credit card debt and mortgage payments. Money does not sit in this account; it moves through on its way to paying the bills you have. Once the debt is all paid off, this money goes into your MOJO to build up to 3-6 months' worth of expenses. Once THAT is done, all money goes to your GROW bucket.
Account 2: SPLURGE - An Everyday Transaction account also with an ATM debit card - 10% of your income automatically comes into here, and you can spend it on whatever you like! Coffee’s with friends, dinners out, etc.
Then it’s time to grow your MOJO:
Account 3: MOJO - Online Saver Account held at a different bank* with an opening balance of $2,000, where the intention is for it to grow over time until you have set aside 3-6 months of living expenses. He recommends a separate bank to stop you from spending it! Your MOJO account is in place of your credit card.
* The reason for using a different bank is to remove the money and the temptation from you and your bad habits. By having it located elsewhere, it will make it harder for you to dip into your savings. If you have restraint, you can keep your MOJO with your regular bank.
AND if you are STILL scratching your head, check out this online tutorial. He is Australian, so the institutions he is talking about don’t apply here, but his explanations of the buckets are good: Barefoot Investor Bank Accounts and Buckets Explained
BANKING
Day-to-day banking accounts you can check out in New Zealand:
Aim to pay no fees, earn interest, and use internet-only bank accounts. Finding an online bank is easy, and we do have good no-fee banking options. Receiving no paper statements will also eliminate fees. Aim for a “high-interest rate” but keep in mind that it’s slim pickings when it comes to earning interest on any bank account, and it’s not likely to change anytime soon.
New Zealand bank accounts often come with hidden fees, such as minimum deposits, a high starting balance, or my least favourite: making a withdrawal and losing all interest for that month.
With interest rates so low, I would encourage you not to sweat the small stuff, because in the grand scheme of things, an interest rate difference of 0.2% between two banks will make little or no impact on your overall wealth. Remember, the point of The Barefoot Investor is to set up bank accounts to control your money. Once you have things under control and have automated as many transactions as possible, you won’t be storing a large amount of money in these accounts; instead, you will be increasing your GROW bucket by investing outside of your bank. I use my bank to keep just a small portion of my net worth these days. I need the money for my daily expenses, my emergency fund, and my goal is not so much to earn money from my bank, but to ensure they don’t cost me money in fees. Investing grows wealth, not bank savings accounts.
Avoid banks that:
Charge a monthly fee
Limit the number of accounts you can open
You have to contact them to open extra accounts
Cancel your monthly interest if you move money from a savings account
Lock your money into a set period, e.g. 90-Day Notice Saver
Try to sell you a credit card when a debit card will suffice
Below are some possibilities to consider; however, I suggest using ChatGPT to help you find the most current options that meet your needs. Chris from MoneyHub has also created a good explainer of Barefoot banking in New Zealand.
This is the Barefoot banking structure, and I have added some bank accounts with TSB as the primary bank. This section falls within the BLOW bucket:
Account 1: Everyday transaction account - Daily Expenses - (TSB Connect Plus)
Sub Account 1: Online Saver Account - Smile (TSB Websaver)
Sub Account 2: Online Saver Account - Fire Extinguisher (TSB Websaver)
Account 2: Everyday transaction account - Splurge - (TSB Connect Plus)
Account 3: A different bank altogether for emergency funds - Mojo - Online savings account. Open with $2,000 in it (Heartland Digital Saver).
This is the BFI banking structure, and I have added some bank accounts with Kiwibank as the primary bank:
Account 1: Everyday transaction account - Daily Expenses - (Kiwibank Free Up)
Sub Account 1: Online Saver Account - Smile (Kiwibank Online Call)
Sub Account 2: Online Saver Account - Fire Extinguisher (Kiwibank Online Call)
Account 2: Everyday transaction account - Splurge - (Kiwibank Free Up)
Account 3: A different bank altogether for emergency funds - Mojo - Online savings account. Open with $2,000 in it (Heartland Digital Saver).
Alternative institutions that readers have suggested are worth exploring, particularly for your MOJO account, include Rabobank (a banking cooperative) and savings accounts with Kernel Wealth and Sharesies (fund managers). Just watch out for fees and the time it takes to access your money.
A tip of my own here is not to get hung up on chasing a marginally higher interest rate if it means splitting your money across multiple banking institutions. You will be adding a layer of complexity that is unwarranted, plus, you will open yourself up to being marketed to by those additional banks (they will try to sell you investments, KiwiSaver, credit cards, insurance, etc.) Be very mindful of this! Keep it simple.
BUT… Do you have a mortgage?
You may already be in at the deep end with a mortgage, and switching banks to avoid transaction fees may be too big an ask and/or not even worth the effort, but the way you structure it does have a material impact. Prioritise mortgage rates over general banking fees when deciding on your banking setup, as there is little point in chasing a no-fee account when that bank has a higher mortgage lending rate. If leaving your current bank is not an option, AND you are paying everyday transaction fees, then pick up the phone and negotiate to have these additional fees cancelled. And don’t hang up the phone until they agree with you. They are making their money from the interest you pay on your mortgage, so what’s a $10 a month fee to them anyway?
Everyone structures their debt differently (revolving credit, fixed, or floating), but paying down the debt by maximising repayments and not extending the loan is the best thing to focus on. Negotiate hard with your bank and ensure you are not excessively out of sync with market rates, which should keep them on course. Bringing an independent mortgage broker on board (one who works for you, not the lender) may be key to obtaining the proper mortgage structure for you.
www.interest.co.nz always has an up-to-date list of current interest rates. Through researching for this blog post, I noted that BNZ and ASB were also banks regularly mentioned by BFI followers who had debt.
(This is my two cents here because I couldn’t resist: Banks put a lot of marketing dollars into creating products to bamboozle you into thinking you are getting a better deal. When people email me and explain their five-tiered mortgage structure, with five different periods and five different rates, and an offset of XYZ, I have to admit to shaking my head a bit. On the flip side, those who contact me and are furious at having a mortgage, are pissed off that the bank won’t let them make additional payments and are desperate to get out of any debt, these are the people that do everything they can to create a straightforward mortgage structure, throw every cent at their debt, get rid of it asap and get on with life and when Scott Pape talks about “getting the banker off your back”, this is what he is talking about).
When you no longer have debt - and that must be your aim - you can bank with whomever you like. Another step closer to financial freedom.
SUPERANNUATION
Australia offers numerous super schemes, which are typically provided by employers. In Oz, the employer contributes 12% of your wage into your chosen super fund (compare that to our minimum of 3-4% with KiwiSaver), and they also pay less tax on their super funds. Scott recommends putting 15% of your salary into your super (in addition to your employer's deposits), which is a shock to most New Zealanders. On the flip side, however, Australia’s pension regime is means-tested, unlike the universal NZ Super system here. Here we pay tax on our KiwiSaver returns. Things are different here, and although some of you lucky sods may have a long-running private super scheme (a rare thing these days), the majority of us will rely on KiwiSaver (as well as savings and investments outside of these funds) in retirement, which is why, when we invest in KiwiSaver, it is meant to stay until you are 65. Draining your KiwiSaver to buy a home directly contradicts the advice in The Barefoot Investor.
We have an ever-growing list of KiwiSaver providers in New Zealand that want you to invest with them. It’s challenging to make a choice and compare apples with apples, especially when in the past they were hiding half of their apples (fees)! The fees you pay are extremely important, but it’s also worth considering the approach of the investment manager. For instance, two providers may have similar fees, but they invest your money in polar opposite investment strategies, such as actively managed versus passive management.
Checking your current fund is a good place to start your search, and you can do it here at Sorted Smart Investor. The point of trying out this fund finder is that it at least shows you how your current fund compares to the one you may be considering changing to.
I’m going out on a limb here to say that in New Zealand, InvestNow KiwiSaver Foundation Series Total World Fund (unhedged) would adhere to the BFI principles of a low-cost, indexed fund. Check out their Foundation Series options, plus Kernel may also have some low-fee options that align with Barefoot.
BFI recommends investing 15% of your pre-tax pay into your superannuation. New Zealanders think they might know better and you may hear people debate the merits of ‘contributing the minimum’ to your KiwiSaver so that you reach the government threshold of $1042 of contributions (not including what your employer puts in) and then contributing no more, and that way you will receive the tiny government contribution of $260 each year. The argument is then that you will invest any additional money outside of KiwiSaver, and that way it will always be accessible to you (more on this below). If you are a saver, I can see this working for you, if you are a spender, it’s got the potential to be a terrible idea because in practice you will save a tiny amount into KiwiSaver, just 3-4%, for your retirement and then blow the rest of your money that you were meant to be saving elsewhere. So, tread very carefully and know thyself, or you may end up accessing your KiwiSaver at 65 and be disappointed at your low balance.
INSURANCE
Like BFI, Jonny and I lost our entire house thanks to the Christchurch earthquakes and insurance paid for it to be rebuilt. Having the right insurance is a really, really good idea! But only get what you need and review it when it no longer fits that need. If you can think of it, there is probably an insurance policy for it (such as phone insurance and pet insurance, for example). BFI recommends choosing a higher excess to lower your premium costs. BFI also heads this chapter, “Your insurance sorted in one beer”. Well, I say, grab yourself a strong coffee too, insurance is a complex beast!
In Australia, their super funds offer insurance, but only some providers (e.g. SuperLife) offer it as an option here in New Zealand. Regarding finding the right insurance, the best approach would be to contact an insurance broker, as personal situations that affect underwriting vary so widely that I would be here for a month of Sundays trying to work out exactly which provider aligns with the BFI strategy. However, choose carefully and avoid the insurance salesperson who wants to sign you up with a specific company because they offer a larger commission than an alternative, as well as the salesperson who works for a particular company (obviously, their insurance will be considered the “best” fit for you). You want them to help you find the appropriate insurance for your needs, not theirs. A great broker will gain a thorough understanding of your situation and provide you with adequate insurance at the best available rate. And if you need to claim, they will guide you through that process as well.
NOTE: Be cautious of insurance salespeople masquerading as financial advisors.
In the original post, I wrote about insurance and listed a couple of insurance brokers, but I’ve now removed them. Why? Because there are just so many brokers offering their services. Therefore, I recommend crowd-sourcing this by starting with MoneyHub, which has published a comprehensive article on how insurance brokers work, and how to find a good one. Then use ChatGPT to review them and offer pros, cons and alternatives.
As far as what type of insurance you need, the BFI recommends you have:
Health Insurance
“Comprehensive private hospital insurance”
Hospital only cover
$500 excess
However, just a note here. This is another instance where New Zealand and Australia differ. In Australia, individuals earning above a certain salary are eligible for a tax deduction for having health insurance. There is a notable distinction between the private and public health systems. Although it might be changing, the argument for health insurance is much stronger in Australia than in New Zealand.
As you age, your premiums will skyrocket, and I know of some people who start up an “insurance fund” of their own very early in life. They set aside a fixed amount of money in a low-fee, passively managed investment over a long period to cover any future medical events—just a thought.
Income Protection Insurance
If you rely on that income, you should consider protecting the income earners in your family. Just take a moment to think about how you would cope if you lost this income, how soon would it be before you were in dire straits? Covering 75% of salary to age 65 or 70 is a guide. If you can afford to self-insure for three months, consider making the waiting period three months as well. If you have debt, this type of insurance is particularly crucial, so make sure you get enough to cover payments to service your debt, which will alleviate financial pressure while you work on your recovery.
Life Insurance + Total Permanent Disability Insurance
As above, you need to ensure that if you are dead or disabled, your family (and yourself) have the money to carry on and not be forced into hardship. As mentioned above, this type of insurance is particularly important if you have debt, so ensure you have sufficient coverage to clear any debt and also provide for your family who will be left behind. Additionally, the reverse is true: as your liabilities decrease over time, you can also lower or end your life insurance coverage.
House Insurance
Total loss
Vehicle Insurance
Select the right cover for your vehicle. Reassess and shop around annually to ensure you are not over- or underinsured.
INVESTING
BFI mentions investing inside and outside of your KiwiSaver retirement fund. Remember that in New Zealand, KiwiSaver is locked away until age 65; however, first-home buyers can access most of that money, or you can access it if you can prove extreme hardship.
By following BFI, he wants you to become financially competent enough to avoid doing either.
NOTE: Australians manage to save for retirement and a house purchase concurrently. Kiwis can too. But it takes discipline and planning.
He specifies pre-tax super contributions of 15%. You can just increase what you are already putting into your KiwiSaver fund (either via your wages or voluntary contributions) up to 15% and lock that money away, or you can split it and put some in an investment fund that you can access outside of KiwiSaver. Remember that if your employer offers to match a higher contribution rate than 3-4%, it’s an excellent idea to take it, and then be sure to top it up to reach 15% in total.
Don’t be fooled by those who say “just put the minimum into KiwiSaver to get the government contribution”, because those people are simply not putting enough aside for retirement. They should finish that statement by then saying “invest somewhere else as well”...
It is also a good idea for many to lock their money away where they can’t access it, because if they could, they would spend it and have a very meagre retirement indeed. But for those who can show some financial restraint (i.e. everyone reading this blog post), investing in low-fee index funds via an automated investment strategy that you can access at any time (but have the restraint not to) makes sense.
More recently, I’ve heard more about the “Barefoot Investor Idiot Grandson Portfolio”, where he recommends regular and automated investments into the following three low-cost index funds, and I’ve given the closest New Zealand equivalents.
Barefoot recommends three funds:
1.
VAS - Vanguard Australian Shares Index ETF
Tracking the S&P/ASX 300 Index
Recommended percentage held in portfolio - 75%
New Zealand equivalents:
2.
VTS - Vanguard US Total Market Shares Index ETF
Tracking the CRSP (Centre for Research in Security Prices) US Total Market Index
Recommended percentage held in portfolio: 10%
New Zealand equivalents:
3.
VEU - Vanguard All-World ex-US Shares Index ETF
Tracking FTSE All-World excluding USA
Recommended percentage held in portfolio: 15%
New Zealand equivalents:
I struggled to find a low-fee equivalent that excludes the US!
Hatch Vanguard FTSE All-World ex-US ETF
*But these suggestions come with a caveat. The Barefoot Investor's suggestions are at odds with those of others, including my own. Although not focused on Barefoot Investor at all, the Rebel Finance School explains why such a home country bias to Australia is not in a New Zealander's best interest. Rebel Finance and I discuss this in the Simple Investing Framework for New Zealanders episode on YouTube. BFI has a home country bias with its recommendation to hold such a large proportion of Australian shares. An alternative would be a Total World Fund that includes the top US and global companies, as well as some from Australia. I would be interested in learning whether he has altered his original investment options or still advocates for this mix.
The key is to automate your investing and make regular, ongoing investments into the fund, ensuring that the strategy continues even in changing market conditions. Whether the share market is up or down is of no interest to you. Just remember that, over time, the stock market always tends to rise, and investing in any of these funds is a long-term strategy of at least 5 years. The purpose is to invest in your long-term wealth.
Whatever you choose, you can then use Sharesight to monitor their performance.
INVESTMENT PROPERTY
Scott Pape discusses investing in property, but not in the way you might think. He’s not an advocate of rental property investing due to the high outgoings and poor returns. However, if you insist on owning property, BFI invests in BWP Trust, which owns 80 Bunnings Warehouse properties, among others. There are a couple of New Zealand property funds that compare:
And remember, if you already own your own home, then you already have a significant weighting to property, plus investors will often also have some exposure to property via their KiwiSaver fund (just go to the fund update section of your KiwiSaver to find out exactly what the fund invests in).
For any New Zealand-based newbie Barefoot Investor devotee, this article will give you a pretty good starting point to apply his book right here in New Zealand. However, just be aware that banks, providers, insurers and investment companies are constantly evolving. Products and services come and go.
While I’ve tried to adhere closely to Pape's suggestions and I agree with the majority of BFI, we differ in our views on investing. Therefore, my final comment to you is to read what he writes, listen to what I say, and learn from others whose resources I share, but ultimately, make your own choices. If you take your Barefoot path, it is guaranteed to lead you to a better financial place.
Please comment below to share your experience or add a thought or suggestion for others to consider. The personal finance community in New Zealand is helpful and willing to share its knowledge.
