- May 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Financial Situation and Goals
I have set up my accounts and spending based on The Barefoot Investor and have recently paid off my $15,000 worth of debt. This has been a significant achievement for me, considering my circumstances as a single mother to a 10-month-old on maternity leave. I have carefully managed my finances, with $2000 in an emergency account at a different bank and $1,500 in savings in my main account. Additionally, I have around $5000 invested in my sharesies account, split between the S&P500 and NZ50.
### Current Income and Expenses
Currently, I am only earning around $700 a week, with breakdowns for splurging, debt repayment, savings, and expenses. While my expenses are relatively low because I rent from family, I am looking to reallocate the $145 previously used for debt repayment towards building my investments for myself and my daughter.
### Financial Decision Making
I am seeking advice on how to best utilize this additional $145 per week. Should I distribute it evenly between investments and emergency fund contributions, or focus on increasing my emergency fund to cover unforeseen expenses such as car repairs or dental emergencies? My current emergency fund of just over $5000 is equivalent to approximately 3 months of expenses.
### How AI Legalese Decoder Can Help
AI Legalese Decoder can assist in analyzing my financial situation, providing personalized recommendations, and creating a solid financial plan for building a secure future for myself and my daughter. By using advanced AI algorithms, the tool can offer insights on optimizing investments, emergency fund contributions, and overall financial decision-making. This way, I can navigate through financial complexities with confidence and work towards achieving my long-term financial goals.
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I’d keep building the emergency fund tbh. $2k barely touches the sides these days.
✅ ✅ ✅ you are killing it!!! Congratulations on your hard work.
– For you make sure you are putting minimum into KiwiSaver so that you get the govt contribution each year (it’s one of the best returns you can get)
– after the 1024 KiwiSaver minimum I’d keep boosting that emergency fund & start investing 50 / 50 towards both goals. No right and wrong some point you may want to focus more on invest or bigger cash cushion we know kids are expensive
– keeping flexible will increase options for your future self.
– think about what motivates you the most do you get excited about investments or excited about a cash Cushion? Do the thing that excites you as you will be more successful at it.
– at the end of the day remember contributions are the biggest factor to success long term.
I’d probably save your emergency fund until you at least hit 5k before splitting into things into investments as well.
FOr one parent and a kid I would think you’d want to end up at somewhere like 10-15k minimum regardless of expenses.
I would split to 70:30 investment/emergency fund until you get to 15/20k emergency fund, having that buffer if your car dies that you can replace rather than relying on finance. Regardless, well done. It seems you’re doing fantastic, and congratulations on the little one
That’s awesome work and you should be proud of it. I like others advice about doing the minimum KiwiSaver contribution required to get matched by the govt, but I’d probably focus first on increasing the emergency fund.
Once again, impressive effort!
I’d also say in addition to great progress, you’re also managing thru a super tough phase that normally would suck up emergency funds. Just be kind to yourself if it takes a year or two to really get momentum. And it can feel shit being frugal as if you’re always going to have the financial pressure
Also a little note. The ECE fees are a killer and very depressing financially until the govt contribution at 3years of age eases the pain.
Good job – agree with the other actual answers above so won’t repeat that
3 months of expenses is a good solid emergency fund, but alot of money. I would target at least 1 month before investing money elsewhere
Well done. Some great thoughts from people. Perhaps with the $20 savings a week for your daughter you could put that in a high interest savings account and then use it should you need to buy anything big for her. I love the idea of saving for her now but you could wait until til she is off to school to start once ECE fees etc are done with. And if you have any left over in the savings account you could start investing with a lump sum then.
Also I love Ruth the Happy Saver (NZ based website/podcast) she has some great stuff around setting yourself up and investing for kids in NZ
You’re killing it – congrats on paying off your debt too! Your expenses seem super low – is that groceries and petrol etc? Agree with building the emergency fund first. The only other thing I’d review/consider is insurance. I have dental insurance since I tend to spend higher on this but some kind of dental savings account, or an annual plan with Lumino or similar might help you stay on top of big bills/reduce the risk of a big bill later. Good luck.
Congratulations. Very happy for you. Here are a few high level tips that helped us
1. Automate your investments/savings.
2. Identify your expenses and know how much you need each month
3. Less is more. (consume less but higher quality content/stuff)
Well done OP, thats amazing. I love the Barefoot Investor, I listened to the audio book a few years back. Have set up all of the funds as they suggested, and its all gone pretty well really.
I have an investor fund, and I have automatic payments that go to that account each fortnight. I then use the money in that account to invest in a range of different areas, important to invest in a diverse portfolio. The key different things I distribute this to include:
– Simplicity investment account (my kiwisaver is with Simiplicity so I already understand how it all works, so I guess that trust is there, but you can set up a separate investor account where it works just like the kiwisaver but you can access the funds when ever you want to)
– I have recently set up an [Investnow.co.nz](http://Investnow.co.nz) account, this has enabled me to invest in key international investment funds, and I can also see how each of the funds have performed over the last 5 years.
– I had some money in Peer to Peer platforms such as The Lending Crowd… this was all going well, but they have recently closed up, so all of those funds will still be transferred over to me over time, but they aren’t open for any future investments going forward.
– I also have a few term deposits via Kiwibank, SBS Bank… ranging from 6%-6.5%
– I have a little bit in Sharesies, but for some reason I don’t really like it, it might be because I tried to invest in some ethical green investments which have had average returns… lol
– I also tried a little bit with Hatch (https://www.hatchinvest.nz/) wanting to invest more into tech… but again, one needs more knowledge of what to invest in before throwing money at it…
– Finally Booster Savy is an interesting card which enables one to use a card like an everyday account but the funds in there still make 5%… [https://www.boostersavvy.co.nz/](https://www.boostersavvy.co.nz/)
They key with setting up automatic payments to go to my investment account (as suggested by Barefoot) over time it builds up, and when I am in the right mindset I focus on distributing it to the key areas listed above.
Keep up the great work OP, you are doing amazing, and great you have a growth and learning mindset.
Wow, great job getting rid of that high cost debt.
Your emergency fund does need to be bigger and obviously you’ve already worked out that consumer debt = bad and investments = good.
The rest mostly comes down to risk appetite; how many months living expenses in your emergency fund? 3 is a common minimum – I do 12 but I’m older and have had lots of time to save and build and put a value on low stress beyond the returns impact of having low yielding cash.
You also don’t need to do 1 at a time, you can split between investing and emergency funding according to your appetite and build them at whatever pace you plan? You also should have a plan with the investment side – what’s it for? When will you need to access it? Risk appetite again? Does KiwiSaver make sense? Once you can answer these you can act accordingly.
Good luck and well done on your progress so far.
Congratulations on the clearing off the debt. You should be proud.
Take your fix costs x 6 months and try to build a buffer. It is best to create an emergency fund that gives you a great baseline and flexibility.
Don’t worry to much about investing now, focus more on good saving habits now ( you are already doing a great job) so when the income lift happens you can max out potential.
What a massive achievement paying off that debt. Well done. I hope you celebrated somehow even if in a small way, and written it down somewhere to reflect on later.
What I like about Barefoot Investor is the idea of the firehose. Directing effort at one thing at a time means it gets done quicker. If I was in your shoes I would focus on increasing your emergency fund for now. Set yourself a target and put the firehose to use. You might get comfort by saving for the couple of years of your child’s early education before they are 3.
I would then set the firehose on investing once your income increases.
And remember to celebrate the small wins.
I might be prying here but… How are you getting 700 a week, on maternity leave? Govt pays only till 6m, is your work still giving you full pay? (asking as im on maternity leave too and would love some extra dosh!)
having that little in savings would terrify me