Money Milestones Q&A: Cathy, Young Family Mother

Tell us a bit about yourself!

Kia ora! I’m Cathy — 34 years old with a husband and a (nearly 3-year-old) son. My main “9 to 5” is as a manager in administration in tertiary education, and I love contributing to a dynamic environment where we can support students’ study goals and aspirations. In my spare time, I try to stay involved in the local musical community and have been fortunate to be offered the occasional paid gig as a classical/operatic singer in concerts and shows in the past few years.

What is your approach to managing money?

I have always tended to squirrel away my money into a savings account, ensuring I always had a back-stop for when those unexpected costs came up or to have money put aside for a specific event or trip. I generally like to budget using a spreadsheet to factor income vs. outgoings, and for the most part, have done this alongside my husband to make sure we’re working towards our individual and shared goals. I also try to avoid unnecessary debt, so even though I have a credit card for “emergencies”, I don’t use it often, and I’ve been working towards paying off my student loan debt over the years.

What are your current financial goals, and how are you working towards them?

The biggest thing on our life agenda is planning for the purchase of our first home. We spent about six years living and working abroad in the UK and Europe, and while it was a wonderful experience, with the housing market in the state it was on our return to NZ in late 2020, not to mention the earning of interest on our student loans during our time overseas, we’ve been put a bit on the backfoot when it comes to achieving this goal. My husband and I both make regular KiwiSaver (or the university-specific equivalent) contributions, and the rest of our saveable income goes into savings accounts and balanced investments.

Where do you go for financial advice and information?

I like to seek out financial advice from friends and family who have achieved or are in the process of achieving shared financial goals. I have also utilized the resources available through my employer. My husband, as a researcher, is always pretty effective at weeding out reputable sources of financial information online.

Have an honest conversation about your financial expectations as a family. Set aside time to budget and weigh up the pros and cons of different working arrangements, e.g. it may be more financially viable for one parent to stay home with the child while the other parent works.

How did having a child affect your financial priorities?

Having our son created a strange dichotomy of focus between the immediate financial impact on our ability to save (outgoings required as part of raising a child) and the desire to future proof for our child’s financial wellbeing. This meant budgeting for life insurance, seeking out investment options, and generally being a little tighter on our outgoings. Larger purchases and big holidays have become fewer and definitely planned well in advance.

What adjustments have you made to your budget since becoming parents?

I stayed home with our son for the first year, which did have an impact on our net income. We try to be more mindful about going out to eat — planning meals and doing bulk weekly supermarket shops. We received a lot of hand-me-down baby gear that offset a large chunk of the immediate costs of having a baby. When I do make personal purchases, I veer towards lower-cost and more ethically-conscious options, such as second-hand/thrifting. We don’t have the ability to save as quickly due to the additional costs associated with raising a child, but where we do have money to save, we make it happen.

How do you manage childcare costs alongside other household expenses?

This is one of the biggest child-related costs in our household, and it is necessitated by my husband and I both working full-time. Once our son turns three, he will qualify for the 20 hours of free childcare per week, which will provide a bit of a buffer for us in terms of managing our household budget. Childcare is prioritized alongside housing costs, power, internet, petrol, and food. And I’m sure I’m not the only mother of an active toddler who would tell you that factoring in the occasional visit to the Urgent Doctors for an inevitable after-hours tooth through the lip situation should probably be a part of your household budgeting.

How do you ensure that you are still saving for your own future while taking care of your child’s needs?

It really comes down to making our immediate needs the priority while putting aside the money we can save. Our KiwiSavers and investments are regular background contributions that we’re hopeful will pay dividends for supporting our future plans. We also have a small amount of pension built up during our time working in Germany that we’re working towards accessing (hello paperwork!).

What steps are you taking to financially prepare for your child’s future?

We are going to be setting up a bank account for our son, where we’ll funnel monetary gifts from family as well as contributing a small amount as part of our regular savings strategy. We’re also discussing putting some of these savings into a balanced investment that he’ll be able to access when he turns 18, that he can then choose what he wishes to put the money towards, whether this be education or to let it further accrue as a contribution towards a house downpayment.

What advice would you give to expectant parents about managing finances?

Have an honest conversation about your financial expectations as a family. Set aside time to budget and weigh up the pros and cons of different working arrangements, e.g. it may be more financially viable for one parent to stay home with the child while the other parent works. Aim to reduce or eliminate any debt you have where it makes sense to do so and look into different savings options. Try to seek out second-hand options in op-shops or in trusted online forums and research as much as you can into subsidies and other funding. Finally, and perhaps most importantly, never take your 2.5-year-old to the toy section of The Warehouse unless you’re a) financially prepared to buy a firetruck; or b) physically prepared to manhandle your toddler out of the store. Good luck! 😊

This interview is part of New Zealand Money Month 2024. NZMM is coordinated by trusted personal finance resource Sorted, in partnership with the financial capability community, and it involves events all around the country to encourage New Zealanders to talk about money and develop greater financial capability. To further the conversation about money, we got in touch with everyday people to explore how financial priorities and challenges evolve through different life stages and milestones.