Celebrating Small Victories

As we transitioned from Level 2 to Level 1 on June 9th, a wave of relief washed over me. It felt like a collective win for Alexandra, a testament to what we can achieve as a community, a region, and a nation. Let's give a round of applause to our incredible whanau of five million! However, personally, I’m still treading cautiously. My experiences with the prolonged earthquakes in Christchurch serve as a reminder: "Don't let your guard down just yet, Ruth." So, I plan to trust my instincts and remain prudent with my finances; I believe the economic recovery journey is far from over.

A Financial Check-in with Jonny

When COVID-19 made its way to us last March, I knew it was time for a serious talk with Jonny. We carved out ten minutes for a rapid-fire budgeting session, understanding that our income streams had suddenly become uncertain. With that realization, we swiftly halted non-essential spending. My budgeting system centers around color-coding: green for income, red for essentials, yellow for insurance, and orange for indulgences. Let's just say, the orange hue vanished from my financial landscape right then! Surprisingly, we managed to enjoy ourselves during the lockdown; it just required a bit of creativity and resourcefulness.

Our Financial Snapshot

Fast forward to June, as restrictions relaxed, my favorite color—orange—began to reappear in our budget, along with a few long-awaited purchases we had delayed. Now, I’d love to share an update on our financial situation and the decisions we’re making—especially helpful for those navigating similar waters. For new visitors to my blog, welcome! Here’s a glimpse into our lives. During the lockdown, my part-time weekly wage stood at $292 (thanks to a wage subsidy my employer received), and I'm gradually returning to 14 hours a week at my office job. While I'm hoping to regain my usual 16 hours soon, my workload has significantly increased in the automotive sector, which is a reassuring sign that our customers are also faring well.

Diverse Income Streams

Jonny, as a part-time freelance graphic designer, faced a downturn initially, but lately, projects have picked up again, although still not at full capacity. Thankfully, he also benefited from a part-time work subsidy of $350 per week for 12 weeks. Additionally, my blog now generates a modest monthly income, and I’ve recently embarked on freelance writing endeavors to further bolster our earnings. Amidst such uncertain times, I feel fortunate that both of us can contribute through multiple income sources, despite our combined income sitting at around $50K for 2020. With careful expense management, we’re navigating these challenges surprisingly well.

The Importance of Budgeting

I might sound repetitive, but budgeting remains foundational to our financial health. It's not merely a constraint; it grants me the freedom to spend within our means while ensuring we save for our guilty pleasures. We’ve been debt-free since I turned 32, and despite tempting offers for cheap credit over the years, we've resisted, adhering to our philosophy of living within our means. Our current financial buffer stands at a healthy $30,000 across various accounts, including an emergency fund of $14,000 and sinking funds totaling $16,000. During the onset of COVID, I feared we might need to dip into that emergency fund as our incomes declined. Yet, by strictly cutting unnecessary expenses, we adapted to our lower income without compromising our financial principles.

Smart Spending Strategies

Reflecting on our strategies, we performed a thorough assessment of our finances, taking stock of income, expenses, and investments, while adjusting our spending habits. The advice I offer others holds true: when faced with income reduction, recalibrate your lifestyle to match your financial reality. High levels of debt will only become burdensome as time passes. Adopt a proactive approach instead of waiting for crises to unfold. By living within our modified means, I conducted a detailed analysis of our spending categories, ready to distinguish between what's essential versus what can be trimmed. With minimal expenses during lockdown, we redirected funds to more pressing needs.

Continuing Our Investment Journey

Initially, I considered pausing our investment contributions, yet the drop in share prices presented opportunities too appealing to sideline. Investing throughout the chaos of market fluctuations kept us grounded. I proudly maintained our consistent contributions, including a monthly deposit into our family's KiwiSaver accounts and weekly investments into the NZ Top 50 and property funds. According to my budgeting plan, I even discovered a little extra to funnel into new investment opportunities. It's akin to finding spare change when you've been thrifty!

Weathering the Financial Storm

While many around me were anxiously clamoring to seize investment opportunities, I took a calm, steady approach, consistently investing regardless of the market's highs and lows. Our combined portfolio, approximately $270,000, took a hit, losing around $40,000, yet has since rebounded close to pre-pandemic levels as of mid-June. This whirlwind journey impressed upon me the importance of keeping a level head during turbulent times and the lessons learned from navigating financial uncertainty will surely serve us in the future.

Mindset Over Money

The cornerstone of our philosophy remains managing our budget effectively. In moments of financial strain, I'd choose to forgo luxuries over liquidating investments any day. We’re in the wealth-building phase of life, and abandoning our investments for temporary relief simply isn't an option.

Teaching Financial Literacy

Conversations about finances with our daughter occur with great care in an age-appropriate manner, ensuring she understands without overwhelming her. We clarify our current financial situation calmly, dedicating time to discussing our decisions and financial strategies. I also slightly reduced her pocket money during tougher times, explaining the reasoning behind it—tightening our belts when necessary. We strive to promote financial awareness without instilling fear.

Looking Ahead

As life resumes a sense of normalcy, we tread carefully. I'm not one to rush into spending excessively just to stimulate the economy. Recent purchases of necessary items, like a new laptop and outdoor gear, were made from saved funds set aside for such occasions. The joy of a slower-paced life during lockdown has highlighted the value of simplicity in our routines, and I find myself more content without the chaos of excessive commitments. Though we feel stable, I’m aware of potential ripples from upheavals in the wider economy, affecting friends and connections who’ve seen job losses. Thus, we remain vigilant—continuing to diversify our income, monitor our expenses, and commit to our investment strategy. The moral of the story resonates clearly: our financial plan has weathered the storm, affirming its resilience.

Cheers to Savvy Saving!

As we focus on our collective financial journey, I extend heartfelt congratulations to two lucky winners of the PocketSmith giveaway, each receiving a one-year subscription to the SUPER Plan! For those intrigued by PocketSmith, consider the free trial to explore its features—you just might find it beneficial for your financial repertoire!