Know what to expect before you're expecting
Marc and his wife have three young children, all under the age of seven. There’s a four-month-old baby in the house and they have just one income - so making ends meet isn’t always straightforward. It’s a challenging situation and one that many Kiwi families will be able to relate to. Here’s how one family made it work.
Dropping to a single income is tough
Anyone that’s had children will tell you it’s a life-changing event. Not only that, the financial hit that goes with dropping from two incomes to just one adds a new layer of stress. While it would be nice to have a financial plan in place before kids come along to deal with such changes, the reality of the situation and unforeseen circumstances often mean many people are left simply reacting to each challenge as it comes their way. This is the exact situation Marc and his wife found themselves in when their first baby arrived seven years ago, in their case, employment uncertainty played a large part in their decision making process.
“We wanted my wife take some time to spend with our firstborn at home. But I was in between jobs then so in reality she ended up having to take on some work for three months until I had work again,” says Marc.
The second child arrives
Marc landed work again, but the juggling act continued and by the time their second child arrived, the couple decided that the uninsulated rental they were living in was simply too cold and draughty for a young family to stay healthy and they needed somewhere better to live.
Marc’s wife again took some short term work that fitted in around their life to help pay for a better rental. In the end, the couple say they ended up paying roughly a third more each week in rent alone, but knew it was worth it for the sake of having a warm, dry home for themselves and the kids.
“The extra work she took on didn’t mean we had any more money at the end of the week, but it meant the extra rent was covered as well as the added cost of childcare once the second child arrived. For her it was also a chance to get back into doing something for herself instead of being so completely absorbed in bringing up two kids,” says Marc.
Juggling jobs and trying to make ends meet
Eventually, the quest to make ends meet lead Marc to seek a new, better paying line of work as they searched for that elusive state of financial equilibrium.
“Back then, I’d been working as a journalist for a few years and thought that PR might be a way forward for me. As it turned out, PR wasn’t for me, but the experience that job gave me opened up a better paying opportunity as a social media analyst.”
After both Marc and his wife spent a couple of years doing what they needed to get by in terms of employment, Marc had finally settled into a job that paid more - with a third child arriving on the scene, this was more important than ever.
A new career and the importance of an emergency fund
In a stroke of good luck, with the new job came an opportunity to spend time with a financial advisor, something that in hindsight, Marc describes as invaluable.
“One of the things the advisor said that really hit home was the importance of having an emergency fund. In an ideal world, three month’s salary is best for an emergency fund, but if that’s not possible, just get in there what you can. So now we kick in $50 a week - it’s now a ‘non-negotiable’. Nothing gets in the way of putting that emergency money aside,” says Marc.
Marc told us that he hasn’t had to use the emergency fund yet and points out that, if left untouched, it could one day double as a potential house deposit.
Pay down that debt
Another tip from the financial advisor Marc says really helped, was to knuckle down and pay off debts, which is where a balance transfer came in handy for them.
“To get rid of one of our debts, I utilised a balance transfer which had a 12-month interest free period. We paid off the existing high-interest credit card using that, then set about paying off the balance. Even though I’m the type of person who’d like to pay debt off sooner rather than later, we spread the payments over the full 12-month term so that we could make the most of the interest free period. This left us more money in the hand each week.”
The importance of saving
Marc also became a big believer in not ignoring the importance of saving, even when paying down debt. He says the confidence gained by watching the emergency savings grow provided motivation to stay on track financially.
“Despite the fact you’re living pay cheque to pay cheque, putting a little aside each week and paying down debt really makes you feel like you’re making progress.”
An eye on the future
In fact, the progress has been good enough that they’re even keeping an eye on ways to grow their savings through investments - starting with a term deposit for their eldest child. Marc points out that this brings an added benefit because it’s helping teach their kids about the importance of being good with money.
“I don’t have any idea what he might use that money for one day, it might be university or a first car, but what I’m trying to do is teach him how a little money put aside each week really adds up over time.”
It’s taken a few years and a few different jobs, but Marc and his family are now debt free and with a little bit of money in the bank. Since writing this article, they've moved to Northern Ireland, where Marc’s wife is from and where they hope to eventually buy a home.