Mindy, a health professional in Waikato

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

I’m Mindy and I’m in my early 20's flatting in the Waikato. I’m an allied health professional by profession. I also run an e-commerce business for ‘passive’ income and am in the process of starting a second.

FINANCIAL GOALS

My relationship with money has changed drastically over the last few years. I used to spend frivolously without really knowing where my money went. As long as I had a positive number in my account I was happy. I would go as far as to buy lunch every day and pay for parking in Auckland city every day which makes me shudder every time I think about it now.

I discovered financial minimalism and realized that by setting myself short and long term financial goals, it’s so much easier for me to discipline my spending, and as a result, my relationship with money has been empowering. I understand where every dollar comes and goes, and I feel like my financial literacy has improved ten-fold. I still try to let myself enjoy a little splurge on things I love like outings with friends, but I’m happy to make some sacrifices now for my future self.

Within the next 3 years, I’m saving up for a house deposit for an investment property to get my foot on the property ladder. My long term goal is to leverage the equity on investment properties to build an investment portfolio and to eventually buy a home in a more desirable area that I want to settle down. I’ve ticked off one goal of becoming financially independent in the sense that I do not need to rely on someone to look after me which is a big deal for me as a young woman. I want to eventually become enough passive income to become financially independent by the time I’m in my mid 40s. I plan to do this through real estate, shares, and my e-commerce businesses which are built to be passive sources of income. I enjoy my job and I plan to keep working past that age but I like the idea of working because I want to, not because I have to.

Assets

• Cash: The cash I have on hand is mainly my rainy day fund which I have in an ANZ supersaver but am in the process of moving it somewhere else for a much higher interest rate. I didn’t really have a rainy day fund until recently but I can say it really makes a difference to know that I have a few months' worth of expenses covered if anything ever happens. I don't keep much in my checking account as anytime I get paid I automatically move about 60% into my money into saving and investing accounts.

• Kiwisaver: My kiwisaver hasn't got much to show for it. I keep it in a growth portfolio with ANZ but I'm in the process of moving to Juno while my account is under $5000, and then switching to Simplicity as the fees are much cheaper after than number. I'm not a huge fan of actively managed funds but I'm happy to give it ago. Once I'm 1-2 years away from buying a home I plan to switch from a growth fund to a more conservative fund to lower the risk of any losses.

• Shares: I invest into US ETFs using hatch, investing 80% into a S&P500 ETF, 15% into a total world stock ETF, and 5% into individual companies for "fun". I feel like I should invest in some bonds but I'm pretty happy to stick to a very aggressive portfolio for now as I’m holding onto my portfolio for the long term. I'm pretty well versed in investing however it wasn't always this way, I didn’t come from a financially literate background and I had to do a lot of reading to wrap my head around it. Making use of the time I have by investing at a young age makes me pretty happy.

• Car: I am always on the hunt for a good deal and I never see myself paying “too much” for a car. I was at the right place at the right time as the car seller had undervalued her car by a good $5,000. It makes me happy to know that even if I sold it today it would still be for a profit.

• Company: along with working my 9-5 job I own a e-commerce business worth around $50,000-60,000 based on some rough calculations. I have grown this business over the last 3-4 years. It mainly runs itself and is a form of passive income, which I am very thankful for.

Debt

My degree takes 5 years to complete so I racked up a pretty high student loan and I wasn’t eligible for any student allowances. It's weird to say but it doesn't bother me that I have over 50k 'over my head' so to speak. I personally believe there is value in putting your money in financial vehicles that can actually help you make more money rather than paying an interest-free loan off quickly. I am also lucky enough to have my parents offer to pay off my student loans but personally feel like it's a waste of their money. Instead I'm paying it myself with minimum repayments and happy for it to chip away for the next 8 years.

I’ve never owned a credit card or taken out any personal loans. I do plan on getting a credit card however to further improve my credit score for when I buy a home. I'm just not sure if that actually matters in NZ like it does in the US.

Income

I earn $75,000 from my day job pre-tax. I know it’s on the higher side as someone who hasn’t been in the workforce for very long so I’m thankful in that sense, but I know I can do better. I always told myself I would negotiate any job I got, but when it came to it I was so nervous about the idea of confrontation I just said yes. I really wish I at least tried, even if they said no. In my day job I also work some extra weekend shifts which is paid in addition to my salary.

My second stream of income is from my e-commerce business which I am pretty stoked with. It was a bit of luck and my target customers are other young women my age so I really understand what attracts them and what doesn’t. At the start, I had to put on many hats - from web designer to UX designer, to social media marketing, packing staff, and customer service, but now the business almost runs itself.

Expenses

Since I’ve been tracking my expenses through an app I feel on top of things in the sense that I’m accountable for where my money is going. I dont feel guilt or shame for spending money because as long as I’m spending within my budget I’m still on my way to reaching my financial goals. I think becoming a financial minimalist has helped a lot, and I’ve been very aware of not letting lifestyle creep happen to me when I transitioned from university to full-time work. I think the thing that keeps me in-check is asking myself “do I want to buy this thing because I need it or because of how it will make me look to my peers” and if it’s the later I just don’t buy it. With social media there’s such a hype about keeping up with the joneses and subtlely showing off your “wealth” and I have to remind myself how little that matters in the long run.

Some more explanation of these expenses below:

• Housing: My rent is only $137.50 a week, as I flat. As a result I don't have many home-related expenses.

• Groceries and home supplies: I spend about $70 a week on groceries. I considered using home delivery serevices like hellofresh or myfoodbag but I worked out that it's cheaper if I just do the same thing myself. What I'll do is I tend to make a list of what I'm wanting to cook for dinner/lunch for the week and then make a weekly grocery list just off that. I try to cook in a way that yesterday's dinner has ingredients that I can use for the next meal, which is what those food delivery companies do. Sometimes I'm a bit cheeky and I copy some of their meal plans :)

• Entertainment: I have spotify premium which I don't use as much as I should for the amount I pay, and I have netflix under my name which my familiy use. I pawn off a family member for their VPN subscription.

• Eating and drinking out: I only give myself $50 a week on eating out or going out. I don't ever eat out at lunch and I make my coffees in the staff room. I am however very social so I end up always going to cafes and restaurants to catch up with friends and family. I used to splurge excessively on this but in the past year have learnt to cut back in little ways without feeling like I'm not letting myself live a little. I have broken up with food delivery apps as that was my biggest culprit. What I do instead is if I don't eat out one week I'll let that $50 allowance "roll over" to the next week.

• Health: Specialist medical care for me, dentist, doctor, and prescriptions.

• Transport: $340 for car insurance, $67 for WOF, $720 on petrol (I have a small fuel efficient car and work is only a 10 minute drive away. most of my fuel costs comes from travelling back home to visit family as they live in Auckland).

• Utilities: I pay $15 a week into a flat account with my 3 flatmates that covers electricity and wifi. Water is free :) My mobile plan is meant to be $20 a month but I find that every month I finish the data cap and end up buying additional data which sometimes brings my mobile bill to $60 a month, which is pretty scary.

• Sports & hobbies: I have a les mills gym subscription which I joined this year. Previously I had just been working out at home but I thought it was time to give myself access to actual gym equipment once I felt like I could stick to a schedule. I got a $100 credit when I joined which is why the price is a little bit lower than their usual 12 month package.

• Health: I don't really go to the doctor often and due to the profession I'm in I get free allied healthcare visits/items. I spend $108/yr on sanitary pads which I think falls under health.

• Shopping: I give myself $90 a month as a shopping allowance. After Marie Kondo's "what sparks you joy" hype I ended up throwing away a lot of stuff and have become very minimal with consumer consumption. I don't really enjoy shopping and when I do I'll prefer some $8 kmart shoes over the same design for $80 at hannahs. I know people say shoes need to be comfortable but I don't find it to be a problem right now.

• Personal care: This is where a lot of my money goes to, I spent a lot on waxing and while I don't buy makeup often, when I do it's always on more expensiver brands.

• Travel: Most of my travelling is done with family which they kindly cover, but within the last year I went on a 3-week overseas trip alone which cost me about $4k. I really enjoy travelling and I haven't been to many places but I don't plan to do any more big trip for 1-2 years.

• Insurance: My medical insurance is still under my families plan which my parents kindly still pay for.

• Pets: Our dog lives in my parents' home but I still like to pay for bills like I used to when I lived at home. $180 for council registration, $300 for vet checkups, $520 on food, $450 on grooming (our dog doesn't shed so needs to be groomed often) and $100 on toys/treats.

• Fees & charges: My bank accounts don't have any fees. If withdraw from my rainy day fund twice in a month I incur a $5 fee which has occured in 12 months.

• Gifts & donations: Every year my friends and I will split gifts for eachothers birthdays which allows us to get them one fancy item they really like instead of lots of cheap items.

Remaining income

This year, every week I take 60% of my income and put it towards my savings (this has been a bit hindered with covid-19, however, I try to still save with the government subsidy). I put some in a high interest savings account to build up a house deposit and I also put some in my investment portfolio.

Inviting feedback from readers

I would love feedback on any part of my financial life but specifically:

• Should I focus solely on saving up for a house deposit instead of investing as well?
• Do credit cards help with improving your credit score?
• Are there areas I can improve on with my spending?

And any other general feeback from reading my story. Thanks!