Two 23yo grads in Auckland

Published on 13 November 2020
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About MoneySecrets: MoneySecrets offers a peek into the financial lives of our fellow Kiwis. The story below was written using pseudonyms to remain anonymous. When commenting, please remember that the writer has laid bare their financial life, which can be a scary thing to do. Please be kind, and enjoy!

INTRODUCTION

Kia ora koutou! I’m Jade and I live with Scott, my partner of almost three years. We’re both 23 years old. We finished studying last year, and made the move from our hometown of Christchurch to Auckland at the beginning of 2020 to start graduate roles in our areas of study.

I work in education and Scott works in the architecture and design sector. Jobs in our areas of study are limited for graduates back home, so we had to look in the main centers in order to both find jobs in the same location (which is why we’ve ended up in Auckland).

We both have different experiences with money. My parents separated when I was young so I’ve been brought up in two households with quite different philosophies surrounding money. In the past I have been very tight with my money! I am not quite so strict these days.

Throughout high school I had to pay for most things I wanted or needed (clothes, phone plan, presents for people, etc) and the pocket money wasn’t quite cutting it so I got a job. I worked a part time supermarket job from the age of 17 until part way through my final year of uni (five years total). Having a limited budget taught me to be careful with my money. I worked different amounts over the years, ranging from 10 hours a week to over 40. I look back and realise that I probably worked more than I should have while balancing studies, but I’m grateful for the money it allowed me to save, the skills that I developed in advocating for myself in the workplace, and experience with managing my own money. Throughout uni my living circumstances changed every year. I went flatting for part of my time at uni, and lived at home for the remainder. Although living at home had financial benefits (I paid only a small board contribution but bought my own food and paid for my travel expenses), I lived out of town, so sacrificed time commuting to be able to save. Being at home also allowed me to give up my job part way through my final year as it was no longer sustainable to work and study.

Scott has had a different financial experience and he was fortunate enough to get a sporting scholarship at university which paid all of his study fees. He also lived at home. He worked a little bit over each summer break in order to pay for his living expenses, along with support from his parents. He generally only worked part time over the summers as it was not viable for him to work full time and train daily, if not twice daily, to participate in competitive sport.

As we have come together with quite different assets and debt, we technically keep our finances separate, but I have combined them here to give the overall picture of our financial situation. For context, we pay a set amount into a joint account to cover bills and joint expenses, and have a bit extra for expenses that accumulate or spontaneous spending that we don’t want to feel guilty about. When the money starts to really add up we transfer some back to ourselves. We then have our own personal accounts which we make our own spending and savings decisions for.

Overall we have money habits and values that complement each other which I think is important in a relationship.

Earning and spending summary
Annual income $104,500
Less tax and payroll deductions -$24,955
Less annual spending -$55,701
Equals remaining income $23,844
Net worth summary
Total assets $108,500
Less total debt -$56,000
Equals net worth $52,500

FINANCIAL GOALS

Short term goals

Both of our backgrounds have led us to be savers, so we try to save as much as we can. The current goal of this saving is a house deposit. Another goal we have is to buy ethically, locally, and sustainably where possible, although we have plenty of room for improvement. My latest change is supporting a local social enterprise that sells eco-friendly cleaning products.

Mid term goals

We would like to move back to Christchurch. This is motivated by the fact we would like to be close to family, but also because housing is far more affordable. Auckland house prices feel unattainable to us. The lifestyle in a smaller city also suits us better. Auckland is big and busy and I spend a lot of time commuting to work. I can’t see myself doing that forever. We moved to Auckland as a 2-5-year plan. Since jobs in our areas are not plentiful back home, we want to get experience in our current jobs to give us a better opportunity of getting roles when they do come up closer to home. Ultimately, we need to have savings so that we would be ok if we moved when only one of us had a job.

I feel as though we have a decent deposit for a house, but I am nervous that by the time we get to buying that our rate of savings may barely keep up with house prices rising. We have briefly considered buying a property in Christchurch that we could rent out in order to get us on the property ladder while we are still in Auckland. Since we wouldn’t be living in the house we wouldn’t be able to use our Kiwisaver balances, so I’m unsure if this is a viable option for us.

Long term goals

This is where our goals are less clear. When I asked Scott what his long-term financial goal is he said “I have no idea sorry” but on further consideration he changed his mind and his goal is to be “comfortable”. What being comfortable looks like and what it requires I am not quite sure of yet. I have recently heard a bit about the Financial Independence Retire Early (FIRE) philosophy. I’m not sure if this is something I would pursue or whether it would be viable for us, but it has led me to think about how I get my money to work for me, and how our financial decisions while we are young could set us up for retirement. Investing scares me though as my risk tolerance is relatively low!

We have talked about being child free, although having a child in the future is not out of the question (we are aware that we are young and our plans may well change!) This is somewhat financially motivated, but there are other reasons. We would like to have the flexibility to retrain and pursue other careers at different points in our lives. We want a level of financial security to be comfortable making these types of changes.

Assets

Assets
Cash $34,000
Term deposits $58,000
Kiwisaver $16,500
Total assets $108,500

I’m really proud of my savings. I hope to have $100,000 across my savings, emergency fund, and Kiwisaver by February 2021. I worked every holiday at school and uni and haven’t had a weekend day off in years between uni and working. I was extremely frugal and chose to miss out in order to save and I don’t regret it.

I keep $10,000 as an emergency fund. I probably don’t need this much but it helps me to feel secure! I have saved $15,000 this year and will add this to my term deposit.

My savings allowed us to get set up when we moved to Auckland. It also helped us feel secure over COVID. My job was secure thankfully, but we were nervous about Scott’s job for a while. My wages alone would not cover our expenses if he lost his job, so having these savings helped us feel comfortable. Thankfully Scott still has his job and the company seems to be doing well. He now has his own savings that can be used in an emergency. I am proud of his savings this year. It can be easy to spend unnecessarily when you start making more money than you ever have before, but he sees the value in saving.

  • Cash: This includes money in our joint account (we always have extra sitting in here for expenses that accumulate), $10,000 in my emergency fund, and $15,000 is my savings from this year which I will add to my term deposit when this matures. Scott has $8,000 across his savings and spending accounts.

  • Term deposits: This is the money that I saved while at university which I keep in a term deposit with ASB (1 year term). This is due to mature soon, and I will add in my savings from this year and put it in another term deposit. Term deposit rates are not great at the moment, but I feel this is the best place for now as it will likely be our house deposit in the next few years.

  • Kiwisaver: I have had Kiwisaver since I started my first part time job. I contribute the minimum amount to get the employer match and have made some additional contributions to maximise the government contributions. The majority of this value is mine, as Scott only joined Kiwisaver this year. We will likely buy our first home before Scott is eligible to withdraw his savings for a house. We both have our Kiwisavers with Westpac. I have mine in a balanced fund and Scott has his in a conservative fund.

  • Vehicles: I sold my car prior to moving to Auckland as it was a hassle to get it warranted every six months and we only have space to park one car. We are lucky enough to have the use of Scott's car which is owned by his parents, so we don't include this towards our net worth and will buy our own car when we replace this one.

Debt

Debt
Student loan $56,000
Total debt -$56,000

Our only debt is my student loan. Scott received a scholarship and was able to live at home so he does not have a student loan. I have a student loan of $56,000 (I have already paid off $5,000 woohoo!) I got out course fees for four years and I got living costs for three of those years. I got this out initially as I was anxious about having enough money, and figured I could always use it to repay my loan. Now I realise that, because it is interest free, it makes more financial sense to pay it back gradually and I really don’t notice it coming out of my pay.

It was always drilled into me to never get a credit card and to only buy things if I can afford them. Although I see how some people use credit cards to their advantage, I don’t think we would consider one.

Income

Income
Salary or wages $102,000
Interest income $500
Other income $2,000
Total annual income $104,500
Annual after-tax income $77,045
Total weekly income $2,010
Weekly after-tax income $1,482

We started our jobs in January 2020. I earn $52,000, and Scott earns $50,000. Scott went down to 80% pay for a few months over lockdown, so won't make quite that much this year. We are lucky to both be starting out on reasonable wages. Given the craziness of 2020, we feel very privileged to have found jobs when we did, as well as having been able to keep our jobs during the year. Scott turned down a job that paid more for the opportunity to work for the company he currently works for. Although I make marginally more than him currently (although take home less due to my student loan) we expect his pay increases to outpace mine over the coming years.

We’re planning for the scenario of having only one income when we move home, as well as reduced income should either of us retrain. This means building sufficient savings and having flexibility to reduce our expenses.

  • Interest income: I estimate $500 of interest from my term deposit and savings. This will not be as good as previous years because term deposit rates are low.

  • Other income: I sometimes do surveys or market research and have made about $400 this year. I was lucky enough to get three in a row worth $100 each! I go through waves of doing these. Scott made $1,000 in university prize money, and the rest is gifted money from birthdays and Christmas.

Expenses

Expenses
Housing $24,780
Groceries & supplies $9,100
Eating & drinking out $1,150
Entertainment $105
Transport $5,690
Utilities $2,846
Sports & hobbies $2,800
Health $330
Shopping $4,375
Personal care $500
Travel $2,215
Fees & charges $10
Gifts & donations $1,400
Other expenses $400
Total annual expenses -$55,701
Total weekly expenses -$1,071

Our expenses were difficult to calculate and forecast due to a couple of things.

  • This year has been different because of COVID, and our spending and income has been affected by lockdowns. For example we saved a lot in petrol this year because I wasn’t driving to work.

  • Our circumstances were vastly different prior to this year (because we were students), so our historic spending may not provide a good estimate of our current living costs in some areas.

  • It feels like there were some one-off costs this year. For example there were a lot of moving costs this year that I didn’t include here (but I’ve included some of our furniture purchases despite this being an expense that may not continue next year).

I was surprised to see how much our rent costs us per year, and would prefer to see this contributing towards paying off a mortgage or living in a more affordable city. There is room in our expenses to reduce costs. I could shave some money off our groceries, clothing, eating out, and miscellaneous spending, but right now I feel our spending is reasonable and we need to balance lifestyle with saving money.

A non negotiable expense is hobbies. We feel it is important to have things you enjoy doing. It was a good practice to calculate our spending in this area this year so we know how much of our money goes towards this. as it is not something we strictly budget for.

  • Housing: We pay $465 in rent for a 1 bedroom unit in a Central Auckland suburb close to the city. We are somewhat limited as to where we can rent so that Scott can get to work in the CBD without a car. We chose to find a place just for ourselves rather than flatting. We could save more flatting, but enjoy having our own space, and a couples room in a flat wouldn't be that much cheaper. We pay $600 per year for contents insurance.

  • Groceries: We try to keep our grocery bill down but are not super strict with this. We aim to have two vegetarian meals a week to reduce our meat consumption and reduce costs. Scott takes leftovers everyday for lunch. We rarely if ever buy lunch at work. We purchase some cleaning products separately from a social enterprise which sells eco-friendly cleaning products, and this comes to about $100 a year. I buy multiple bottles of what we need at once to save on shipping.

  • Eating out: We spend more on eating out than I expected! I thought we very rarely ate out but it really adds up when we do. Half of this is made up of takeaways or lunches out from our joint account. The other half is me, usually from meals out catching up with friends. The goal will be to not exceed this next year, keep to one takeout/meal out per month, and I will keep to a monthly budget for myself!

  • Entertainment: Our only entertainment expense is Spotify premium which Scott has. He gets a discount through his phone plan. We also attend the odd sporting event but this is very infrequent and not very expensive.

  • Transport: We have one car that I drive to work. We were saving a lot on petrol during lockdown so this cost is estimated based on our most recent spending on petrol which comes to $4,500 for the year. The rest is $350 on third party insurance, $67 for the WoF, $100 on rego, $65 on car cleaning. $350 of this is bus money. We both have bus cards and Scott catches the bus to work a couple of times a week. He runs to work most days though which has no cost! Scott is also an AA member.

  • Utilities: This year we spent $900 on internet. This might be more next year because we got a special deal. We both own our phones and pay for a $19 plan a month each which gives us enough minutes, texts, and data for our needs. We need a plan with decent minutes as we do not have a landline and don't anticipate getting one. Water works out to be roughly $25 a month. Our water bill estimates our usage at the top end of a two person household so there is possibly room for improvement! Our electricity bill obviously ranges, but averages at $100 a month. Since we moved from Christchurch to Auckland we actually found winter pretty mild and did not run the heater much despite being in a single glazed, uninsulated home!

  • Sports & hobbies: This category is mostly Scott! $2,500 covers gear, club membership, and the costs associated with the sport he competes in. This could be higher in the future as he has not been training all year round this year. But this will depend on how competitively he chooses to pursue this in the future.

  • Health: This is estimated on two doctors visits a year each. I know I should budget for dental checkups also, but in all honestly it is unlikely we will go.... If we did we would take this from emergency funds? I made the most of subsidised dental at uni so dread paying for dental care.

  • Shopping: $2,000 of this is clothing. Another area where the spending has added up! I try to opshop when I can, and endeavour to buy good quality, but opshopping takes time and luck which I do not always have, and sometimes the price of good quality can be hard to justify! I feel we are pretty good at only buying what we need and wearing out what we already own. We also spent a lot on household purchases this year as we moved out of home and into our own place. This included furniture and homeware, as although I had some basic stuff from flatting we still needed a lot. We anticipate this spending to be less next year, although there are still some things we would like to buy or would need to buy if we had to move rentals so have budgeted for this.

  • Personal care: I get my hair cut about twice a year at $80 a cut. I used to cut my own hair while at uni to save money, but feel I can justify a decent cut now that I work fulltime! Scott gets his haircut once every two or three months. I spend a small amount on skincare and makeup, and Scott also has some expenses here, but most basic personal care products are included in our grocery budget.

  • Travel: This is mostly for flights home! We have both travelled home to Christchurch twice this year and have another trip planned. Whilst we are living in the North Island we plan to take some trips around to see places we (mostly I) haven't been to before. This summer we will take a week long trip around the central North Island and are going to be tenting at campgrounds to keep costs down.

  • Fees & charges: Most of our account fees are waived due to being on tertiary/graduate accounts. I believe the only expense is the annual fee for my joint account debit card.

  • Giving: I have a big family so buying gifts can get expensive. I have kept to a strict budget in the past. My new philosophy around present buying is to only buy someone a gift if I know what they want or KNOW they will love it. I'm not sure my family is quite on the same page as they really value gift giving which sometimes leads to buying for the sake of buying which I don't love. I try to stick to my values by aiming to buy experiences (my recent thing has been emailing restaurant vouchers) or things from local businesses. Markets are great for finding cute gifts! This will be my first year not living as a student at Christmas, so I've just estimated a Christmas budget based on what I think I will buy. At Scott's family Christmas we will be doing a secret santa so we will only have to buy one gift.

  • Other expenses: There are always random expenses which now that I go back through our spending I am unsure what they are, but have still budgeted for this as random things always come up.

Remaining income

Earning and spending summary
Annual income $104,500
Less tax and payroll deductions -$24,955
Less annual spending -$55,701
Equals remaining income $23,844

At the moment our extra money just goes to our personal savings. This is mostly for the purpose of a house deposit, and other costs associated with moving when the time comes. We have similar savings goals and aim to each save around $14,000 a year.


Inviting feedback from readers

We would appreciate any feedback on the following!

  • Is there anything that stands out that we should do differently?

  • Should we consider getting on the property ladder before we have definite plans to move back home?

  • Any tips for getting started in investing?

Kia pai tō rā! Have a good day!

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Kia ora Archie,

Thank you very much for your comment! I really appreciate you taking the time to add links and I look forward to looking into them. I am especially interested in the first article you linked as it is not something I have heard about at all.

My emergency fund is in a high interest account. I am thinking of reducing it by a few grand especially now that Scott has built up some savings because I am aware that this money essentially is going 'backwards'.

I honestly had not considered shopping around for term deposits. I suppose I have always been with the same bank so hadn't ever looked at what other banks may offer. I will definitely research this! Same with KiwiSaver. I have never considered moving this as my mum opened it for me when I was younger. For a long time I had no other accounts with Westpac so never thought about KiwiSaver other then when they sent me statements once a year. So that is another thing I will take a look at thank you. It is easy to get complacent when something is 'working'.

I had not thought of our internet as expensive. We didn't know how much internet we would use so we got unlimited. I have recently been wondering whether we could get away with not having unlimited. We will definitely bee looking around!

Again thank you, lots of things for us to consider!

Jade · 3 years ago

Great story Jade. I would check out InvestNow as a way to start investing - they also do term deposits so you can go with another bank without having to open an account. IMHO I would seriously look at getting a house in ChCh asap. You have a decent deposit, good saving discipline (which banks like) and good jobs. It seems scary to take on that much debt but it is worth it! Interest rates are very low and look to be that way for the next few years too

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