Five books to read in lockdown

Last week, on August 17th, I was celebrating my birthday with my husband when the unexpected happened. We were at our favourite local Italian restaurant, enjoying creamy seafood marinara pasta and lamb gnocchi paired with prosecco and old-fashioned. Earlier that day, news had spread that there’d been a positive COVID-19 community case in New Zealand for the first time in six months.

The TVs in the restaurant were all playing the 6pm government announcement, and we joined our fellow diners as we held our breath, awaiting what this would mean for us.

Lockdown for 7 days.

Over 5 days of lockdown, so far our national community cases have risen from 1 to 72. With most cases being from Auckland, it’s unlikely our city’s lockdown will be limited to 7 days. It’s hard to describe my emotions at the moment: a mix of anxious, discouraged, optimistic, restless, determined, devastated, and content.

If you’ve also been on an emotional rollercoaster, I’d love to share with you five books to read during lockdown - five of my favourite books, and words that are perfect for this strange time we’re in.

Where Hope Comes From - Nikita Gill

A beautiful, hopeful book. If I could recommend only one book for anyone experiencing anxiety during lockdown, it would be this one.

In this poetry book, published 2021, Nikita Gill explores our collective trauma through the life cycle of a star. She invites us, the reader, to feel connected to the universe, by taking us on a journey through the five stages of grief to the five stages of hope.

Nikita Gill has a way with words - I’m a big fan of her other books, Great Goddesses and Fierce Fairytales - and Where Hope Comes From is no different. The poems in this book will remind you that what you’re experiencing is normal. It will remind you that you don’t need to be productive every second of the day. It will remind you that it is okay if all you do is breathe, take it slow, and survive another day. It will reignite your hope.

The Comfort Book - Matt Haig

Another fresh 2021 publication, The Comfort Book is a collection of reflections on hope, survival, and the messy miracle of being alive. There’s philosophy, self-reflection and anecdotes, lessons learned from nature, animals and famous people, lists, and inspirational reminders.

The Comfort Book is, indeed, comforting. It doesn’t try to tell you that everything will magically get better. It doesn’t make you feel guilty for going through a tough time. It’s calm, patient, and hopeful - and allow you to see more of life’s beauty and possibility.

This One Wild and Precious Life - Sarah Wilson

In This One Wild and Precious Life, Sarah Wilson uses science, literature, philosophy, and her own personal journey to encourage us to overcome our collective despair and disconnection. Chapters of research and commentary are interlaced with stories of her travels to places like Crete, Los Angeles, Jordan, Australia, and Japan. Along the way, she explores our crisis of connection, loneliness, social media, capitalism, climate change, and coronavirus.

This is perfect if you’re feeling contemplative and in search of a deep read.

The Alchemist - Paulo Coelho

‘To realise one’s destiny is a person’s only obligation.’

The Alchemist is an inspiring, fascinating novel that is always powerful and uplifting, no matter what I’m going through.

Paulo Coelho’s story follows Santiago, an Andalusian shepherd boy who travels from Spain to Egypt in search of a treasure. Along the way, he meets a Gypsy woman, a man who calls himself king, and an alchemist, all of whom point Santiago in the direction of his quest. What starts out as a journey to find worldly goods turns into a discovery of the treasure found within.

One of my favourite books, I re-read this novel often - sometimes when I like some light reading that’s also deeply evocative, sometimes when I need encouragement during tough times. Because of how simply it’s written, this is also a brilliant book for those who want to get into reading more often, but don’t know where to start.

Home Body - Rupi Kaur

Rupi Kaur named her latest poetry book ‘Home Body’ because, she says, these are synonyms for each other.

after being disconnected for so long
my mind and body are finally
coming back to each other

- home body

If I could describe this book in one word, it would be cosy. This book feels like a warm hug for the soul, full of short but captivating poems that will help you cultivate feelings of self-love. Rupi Kaur also addresses topics like racism, sexual abuse, and trauma, giving victims the knowledge that they are not alone, and that healing is possible. A beautiful, raw, and honest poetry book that will resonate with those who have gone through similar struggles, or for those looking for a thought-provoking, introspective read.

If you are looking for mental health support this lockdown, you can get help from the Mental Health Foundation. You can also follow them on Instagram for helpful tips to take care of yourself during this time - even if it is simply taking a deep breath.

As I write this, the government is due to release our latest COVID-19 update, with the decision on whether to extend lockdown being announced at 4pm tonight. Wherever you are, I hope you are staying safe and well. x

Love,

Sophia

The truth about taxes

It’s a common myth that we pay a third of our income in taxes. But not only does New Zealand have some of the lowest income tax rates in the OECD, we definitely don’t pay a third of our income in taxes!

So how much do we actually pay? Today, I’ll illustrate how income tax works and let you know how to check it out for yourself.

New Zealand has a progressive tax system. This means that everyone pays the same tax rate (10.5%) on the first $14,000 they earn, no matter what their total income is.

If they earn more than $14,000, they’ll pay 17.5% tax on the income that’s above the $14,000 threshold; if they earn more than $48,000, they’ll pay 30% on the income that’s above the $48,000 threshold, and so on.

The myth that we pay a third of our income in taxes comes from the tax rate for the highest tax bracket prior to 2021, which was 33%. This 33% rate only applied to income over $70,000, so if you were earning $75,000, only $5000 would be taxed at 33%.

Let’s say you earn the average NZ income - $53,598, based on the average gross household income of $107,196 in a two person household. Here’s how your tax would be calculated:

You’d pay $9099.40 on $53,598 of income, or 16.9% - less than a fifth.

What if you earned $70,000 a year?

You’d pay $14,020 on $70,000 of income, or 20% - exactly a fifth.

So how much would you need to earn to pay a third of your income in taxes?

Approximately $335,000:

You’d pay $110, 770 on $335,000 of income, or 33.1%.

According to the Trade Me Salary Guide, it’s highly unlikely that most typical New Zealanders would ever get to a point where they are paying a third of their income in taxes!

Check out the calculator for yourself using the IRD taxable income calculator here.

Don’t forget: taxes pay for financial support that you and your friends & family are likely to have received some time in your life, including:

• Jobseeker Support

• Working for Families

• Accommodation supplement

• The $520 Kiwisaver government contribution

• Paid Parental Leave

• Winter Energy Payment

• NZ Super

• The COVID-19 Wage Subsidy and COVID-19 Resurgence Support Payment

• First year of free tertiary education

• Our roads, schools, libraries, hospitals & healthcare

As I mentioned earlier, New Zealand has some of the lowest income tax rates in the OECD. In 2019, New Zealand ranked 24th out of 37 OECD countries in terms of tax to GDP ratio - far behind Denmark, France, and Belgium!

I don’t know about you, but this is why I don’t complain about paying taxes. It is a blessing to have easy access to many helpful resources, and to know there is support if you need it. Having lived in New Zealand for 25 years, I’d always had an excellent experience with government entities like IRD, WINZ, Studylink, and other public services. The government is also behind Sorted, a website I’ve found extremely useful for financial tips that are simple and easy to read. I’m grateful especially to our hospitals, who treated my family with immense care, kindness and compassion when my father passed away in 2019, and to our libraries, where you can not only get free books and movies to borrow, but free resources like internet, classes, and workshops.

I hope this post has helped you understand more on how income taxes work in New Zealand! Let me know your thoughts or questions in the comments below, or by using my contact form.

Love,

Sophia

A $14,000 pay rise

A few weeks ago, I presented my friends on Instagram with a dilemma I was having: to take a higher paying role that is aligned to my career path, or to take a lower paying role that is aligned to my purpose and passion?

The question came with the exciting news that I'd received two job offers:

Option 1:

$12,000 pay rise

No WFH that I knew of

Aligned to my career path (financial services industry)

Permanent

Option 2:

$4000 pay cut

WFH 3 days a week

Aligned to my purpose and passion (humanitarian industry)

Fixed term until January 2022

I then asked in a poll: Would you take a pay cut to do what you truly love, and excites you?

Most people (81%) voted that yes, they would.

I, too, was leaning towards this. It seemed like the intuitive choice: for years, I'd been wanting to break into the humanitarian and non-profit industry. It's something I yearned for. I recall sharing with them in the interview how thrilled I was to be there and how, after years of volunteering for non-profits, I'd love to take on a paid role and actually work in the industry.

Not to mention, I love this charity. They are an international non-profit organisation (most have heard of) who help to transform vulnerable children's lives by fighting injustice and poverty. It's one of the most meaningful companies I could ever imagine working for.

I was out at lunch that day when I received a call from Madison, calling to confirm that I still had the verbal job offer from my other choice - an international financial services company. My recruitment agent reiterated the benefits, and so I asked, 'Can you please let me know if there's any WFH flexibility and also, where the office is?' (Their office location is hidden online.)

When she told me she'd find out, I said, 'Just to be transparent, I've received another job offer, so I'm currently weighing up the pros and cons of both and hope to make a decision soon!'

That afternoon, she came back to me with two pieces of good news: there's 2 days WFH, and the office location is in my favourite North Shore suburb - only 15 minutes drive away. (Compared to a 1 hour drive for the other role!)

But there was more. It seemed she'd told the company that I had another job offer, so they increased their salary offer by $2000 - bringing my potential pay rise up to $14,000.

I was shocked. As if a $12,000 pay rise wasn't a large enough jump already, it's now $14,000? I couldn't believe it!

Meanwhile, the humanitarian charity sent me an email: my official offer of employment.

I spent all of Queen's Birthday weekend deliberating, plus reflecting on what my friends had said:

'If you take the job that pays more you can save up and afford to work part time doing your passion later? But otherwise go paycut if that will make you happy imo!'

'Maybe a permanent role? Save up heaps then go for a life time role which you're more content with.. HOWEVER.. if the 2nd one is what you have been waiting for your whole life... there's your answer.'

'Deffo second option. It just makes more sense for you!! Happy, wfh, what's 4K a year when it comes to your happiness?! either way hun I support you!! Both are great, but more money won't make you happy and fulfilled in your job day to day!'

'I voted happiness but tbh I was torn on that. 12000 is such a big jump!'

On Tuesday, I emailed the humanitarian charity back and wrote, Thank you very much for offering me this role. Though it was a difficult decision, I have accepted a position with another company.

I then told the financial services company that I would like to accept their verbal offer. I'd decided to go with them, and to sponsor a child from the humanitarian charity.

AHHHH!!!!

A little about how amazing this is: this role is based in Wellington. Halfway through my job hunting journey, I'd hit a wall and decided to widen my search to roles in Wellington. I'd be happy to move back to my second home any time, and my husband's company has an office in the Wellington CBD - so it would've been no problem and in fact, an exciting change to move there together.

When I got the job offer for this, my first thought was, YAY!!!

My second thought was, OMG, DOES THIS MEAN I'M MOVING TO WELLINGTON?!

But not only did the company offer me a generous salary, they offered for me to work from their Auckland office, while being part of a team that's in Wellington.

What's more, they offer 4% Kiwisaver employer contributions - instead of the minimum of 3%! To illustrate, on a $65,000 salary, this 1% would make a difference of $650 more per year.

I'm so lucky.

Plot twist: two days later, I received a call from the humanitarian charity - after I'd already thanked them for their offer but said no.

'Hi Sophia, I'm just calling because we have had the exact same role come up - but this time, it's permanent,' they said.

I couldn't believe it. The fact that the role was supposedly fixed term until January 2022 was a huge deciding factor for me. It had been so exhausting searching, applying, studying for interviews, interviewing (phone, 1st, 2nd interviews) that I knew I didn't want to go through all of it again in only 7 months time. Doing what I love and helping to save the world, without a time limit? That could've been a game-changer.

But I'm off to add even more to my insurance, tax, and banking experience - with a wonderful new company. I'm young, it's still early days in my career (I have 35+ years left in the work force - but really, about a decade more, as I'm retiring at 40), and there's still plenty of potential and possibility. I'm passionate about saving the world, but also passionate about helping people improve their financial wellbeing.

I'm THRILLED to be back in the financial industry.

I'M BACK, BABY!!!

This hasn't just been a job hunting journey. It's the story of how I came alive again. I started job hunting because I hated my day to day life and wasn't feeling fulfilled.

Gradually, my world became big again, my heart expanded to life's possibilities, and I learned to believe again that we as humans are always capable of growing - no matter how much it feels like we can't.

If you are in the same boat, I hope my job hunting and interview tips give you some helpful guidance & inspiration to land the job of your dreams!

“Tell your heart that the fear of suffering is worse than the suffering itself. And that no heart has ever suffered when it goes in search of its dreams, because every second of the search is a second's encounter with God and with eternity.”

The Alchemist - Paulo Coelho

Love,

Sophia

My job hunting journey, interview tips & job offers

It all started when I went to a job interview.

I had been job hunting casually. Applying for jobs here and there, but in no rush to leave my current job. But on this day, something changed my perspective.

On the day of the interview, I arrived an hour early and grabbed lunch at the cafe across the road from the office. I sat outside in the courtyard, surrounded by lush greenery and the cool breeze on my skin, eating my sushi. As I looked up and watched the world around me, I felt something happen.

For the first time in a long time, I felt expansive.

I watched people walking around, enjoying their lunch, looking happy, having vibrant, animated conversations with their friends and colleagues. I looked at the beauty of the nature and architecture around me, standing tall and proud.

I stepped into the large office building, with storeys upon storeys, and felt this buzzing energy; that kind that comes with doing meaningful work. The kind of work I used to do.

I remembered what it was like to have good days and bad days; what it felt like even on those bad days to know that the work always meant something. That it was always worth it.

And just like that, I felt this realisation come to me, feeling like a forgotten truth my heart had known all along:

The world is big!

As my world suddenly became bigger, I suddenly felt full of possibilities again. I wondered, 'How have I let my world start to feel so small? How have I let myself get used to feeling so limited?'

It was then that I decided: 'I always want to feel this expansive.'

Which is when the relentless job hunting started - after I went to this interview on 5th May 2021. I received the first of my job offers on 1st June 2021.

Here is everything I did during my job hunting journey. If you are also searching for something better out there, I hope it helps you too.

Finding jobs to apply for

The first step to any job-hunting journey - well, apart from brushing up your CV! Here are all the places I sourced jobs to apply for:

Do Good Jobs

Trade Me Jobs

Cultivate (recruitment company)

Madison (recruitment company - my experience with them has been the best!)

Tribe (recruitment company)

Bumble (LOL. Yes, I joined Bumble, on Bizz, the networking side)

LinkedIn Jobs

Remember to sign up for email job alerts!

Kept a job-hunting journal

THE. #1. BEST. THING. I. DID.

Every time I have job hunted in the past, I never kept a record. This time, I was determined to do it differently. This time, I kept a written record of every job I applied for. I also kept a record of my interviews, exactly what questions were asked, where I did well, and where I could improve.

This time round, I was asked a lot of tough questions. There were the typical ones: "What are your strengths? What are your weaknesses? Why do you want to work for this company? What about this role interests you?"

I generally ace these typical ones, and it's always clear when the interviewers smile, nod enthusiastically while making eye contact, write it down, or even directly say, "That was an excellent answer."

But there were also some questions that definitely caught me out. An interview I feel like I failed epicly started its first question with, "Can you tell me about a time when you didn't complete your work?"

I didn't have an example, let alone a STAR example. Crap! It was an extremely strange question to me, anyway. Why would I have a situation where I didn't complete my work?

Doing my own post job interview evaluation every time helped me turn every experience, good or bad, into a valuable one I could learn something from. No matter how well I think I already did, or how poorly I thought I did, keeping a record proved extremely useful every time I had another interview to go to!

Know the company's values

Some companies use this interview format: they go through their values one by one, and ask for a STAR example of how you have demonstrated each example. If you haven't come across it before, STAR is Situation, Task, Action, and Result.

I was caught out in one interview because I had spent a significant amount of time learning their company's financial products and services, but forgot to properly read their values page. (Out of sheer luck, perhaps, when I was asked to describe my personal attributes, a few actually just happened to align with their values anyway.)

After I wrote this down in my journal, I went extremely prepared at my next interview, and aced discussing what the company's values were and how I demonstrated each one. One of my job offers came from this interview. Failing at one thing isn't the end - it just helps you shine the next chance you get! Remember, 'you're not starting from scratch, you're starting from experience.'

Make it personal

Personally, I've always found that the interviews where I expressed myself genuinely are the interviews that tend to be successful. Here's why I think it's important!

At job interviews, I don't want to sound like a robot, reciting facts about the company back to them. So one thing I do is: I go through the company's website and I find a few things that really resonate with me on a personal level.

For example, a company may have incredible stats and figures, but that is probably not going to excite me.

What does excite me, however, is a company having a Rainbow Tick certification; providing sanitary products for women; being committed to diversity; or winning awards for ethical business practice.

When I tell them that I love these things, the passion comes through in my expressions, my gestures, my voice, because I mean it. And they can see that.

I do occasionally bring up things I love about the company's actual work. For example, I told a life insurance company something that I personally noticed:

'I love that you guys have really put a lot of thought into your life and health insurance policies. I have looked at other life insurance companies, and most of their policies are the same, covering the usual things like injury, illness and death. But you guys have thought about everything, from childcare assistance to emergency transport to rehab, therapy & counselling costs. It shows that your company really cares about its customers, and has considered everything to protect them and their peace of mind."

In a nutshell: find something you 100% genuinely love about the company so that when you talk about it, you mean it and it shows.

Remembering scenarios / STAR examples

It's essential to memorise a few STAR examples! Here are some of the real situations I was asked to describe:

• A time you negotiated

• A time you worked extremely hard on a project, and the result

• A time when you experienced conflict

• A time when you struggled, and how you overcame it

• A time when you had to change someone's way of thinking to yours (yes, a real one - tough!)

• A time you worked as part of a team to achieve a goal

• A time when you resolved a complaint

• A time when you went above and beyond

Something I learnt as time went on was that I could change the focus of each example to fit the question - even if it was originally about something else.

For example: describing a time when I negotiated. I might use an example I would've usually used for 'going above and beyond', but in the situation, it actually did include negotiation.

I would tell them about the situation, but focus strongly on the negotiation instead. Remember: no matter how challenging the situation, always close with a positive outcome.

Overall, I have about 6 real work situations committed to memory, which have all been useful at one point or another!

Dealing with rejection, doubt, fear of failure

Struggling with insecurity has always made job hunting even more difficult as it's a process where many people often encounter rejection.

I'm really grateful that this time round, I seem to have become more resilient. How did I do it? Personally, I treated each interview as free interview practice.

Even if you go to an interview and don't get the job, you've gained something - valuable experience! You now know what questions are asked, how to speak with interviewers, what you are good at, what you are not so good at, and how to do even better at the next one.

It's like taking your university entrance exams, and knowing you only get one shot. Then imagine you get limitless FREE practice exams. That's how I saw it, and it stopped me from taking each 'no' to heart.

In my personal life, I've learned to turn jealousy into inspiration. Instead of being jealous of someone's success, I choose to feel inspired.

In my work life, I've learned to turn fear into curiosity. Instead of being afraid, I choose to be curious. What can I learn from this? What exciting new thing will I discover today? What new skill will I add to my repertoire today?

Two job offers!

I received my first job offer 3 hours after I had the interview for it.

"Hey Sophia, she was really impressed with you and wants to offer you a role in her team!"

YAY!!!

I received my second job offer 3 days later, from a company I'd had my second interview with a week prior.

I like both companies, so have a tough decision to make. I can't wait to share more with you next time!

I hope you have found some helpful tips for your own job hunting journey. Best of luck, and always remember:

The world is big!

Your possibilities are endless. Your potential is limitless. If you lose one opportunity, another will come along. You are not stuck.

To living expansively,

Sophia

Budgeting, saving, and making space for each other’s needs & wants

Money had always been an awkward topic to talk about.

So in 2018, when I first heard of the term 'getting financially naked' from Erin Lowry of Broke Millennial, I was pleasantly surprised to discover that my partner and I had already done it without knowing. Rather than shying away from the topic of money - how much we made, how much we had in our bank accounts, how much debt we had, how much we had in savings - we'd brought it up as easily as one would bring up what they had for lunch.

Talking about money wasn't the only thing that suddenly seemed simple and easy with him - being in a relationship was also much less complicated and messy, and full of more joy, affection, and communication. So, surprise surprise - my first real 'partner' (rather than boyfriend or girlfriend) became my husband!

Our (financial) relationship timeline

March 2016 Went on our first date + became a couple.

March 2017 I bought my house.

July 2017 He moved in.

September 2017 Made our first big purchase together - a 5 x 5 white cube shelf!

April 2018 Opened our first joint account.

November 2018 Went on our first overseas holiday as a couple to Melbourne, where we got engaged at Eureka Skydeck 88.

November 2020 Finally got married in Queenstown, after COVID delayed our March 2020 wedding!

As a couple, we've always been extremely open and honest about money. While personal finance books constantly cite money as the #1 topic couples fight about, I feel like my husband and I have avoided this due to a few reasons:

I took it upon myself to manage our money, purely out of curiosity and eagerness to try out the tips in all the books I read;

We are both the same with money - neither much of an impulsive spender or obsessive saver;

We talk about our money goals, and are on the same page when it comes to our personal goals, careers, kids, etc;

We both contribute to our fortnightly couple's budget, allowing both of our needs & wants to be met.

Today I'd like to share with you how we do this fortnightly budget. It's super quick and easy to set up and maintain, and of course, free!

How we budget (+ example!)

We use Google Sheets, which you'll find in the top right corner of Gmail or here.

Make sure you check the privacy settings!

We created three sections:

1. Our net (after tax) fortnightly income;

2. Our respective savings amount based on this income (we're currently saving 25%);

3. Our living expenses, which are the things we have to pay for every fortnight, like bills

Creating automatic calculations can be done by selecting the cells you want - for example, all of the cells with your incomes - then going to the Functions dropdown menu on the very right and selecting 'SUM'. This will add up everything in the selected cells.

You can do this for all three sections - income, savings, and expenses. For savings, select the cell where you want the calculation, look at the cell where your income is, then type the formula "=[Income]*0.25". (E.g. our formula looks like this: =D2*0.25 for 25%). It'll automatically calculate how much you need to save!

Then, create a calculation at the bottom that automatically takes your total joint income and subtracts savings and expenses, showing you what's left over.

You can do this by selecting the cell you want balance to show up in, then typing in "=A-B-C" where 'A' is the cell containing the sum of your income, 'B' is cell containing the sum of your savings and 'C' is the cell containing the sum of your expenses. (E.g. our formula looks like this: =E5-E11-E39)

Voila! This is our basic fortnightly budget. We then take this basic budget and create a specific budget, tailored to each fortnight and any expenses coming up.

Simply right click on the tab and click 'Duplicate'! We name ours to the date of my next payday, which happens first.

Now the fun part. Since everything we always pay for is copied over, we can put in anything we want to buy or spend money on that coming fortnight. My husband will put in $100 for a video game that's coming out within the next 2 weeks; I will put in $80 for an event I want to attend (I have one in our budget right now for a Modern Intuition & Manifestation workshop!).

Anything else specific also goes in here, like car rego renewals and whatnot.

As long as we save at least 20% and what's left over is not in negative, it works for us! Both of us get to buy things we want or attend events we're interested in, as we've made room for both our priorities. (Though we do sometimes find each other's chosen expenses questionable...)

You don't even need to set aside time to write this together. Because the spreadsheet is equally accessible to both my husband and I, we just put in expenses whenever something crosses our mind, whether we're at home, on the bus or at work.

When it's payday, we bring up the spreadsheet and cross out (strikethrough) the ones we've already paid, so we don't send a payment twice.

So what happens when we do find each other's expenses questionable? Like, do you really need to spend that much on this thing, babe?

Money values

It all comes down to values: finding out what's important to your partner, and why - then, learning to understand and respect that.

For me, spending money on advocacy is the highest purpose for which my money can be spent on. Buying new books, attending spiritual workshops, they're nice luxuries to have - but donating to a cause I'm passionate about, or raising awareness of said cause, to me, has never had a definitive spending limit. Hence, the first year I decided to buy pâtissier-made rainbow cupcakes, rainbow lollies & rainbow mugs to raise awareness of Pride Month at work, my husband asked, "Why did you spend almost $400 on this?" and my (admittedly cheeky) reply was, "It's a small price to pay to contribute to social equality and elevate human consciousness."

This year, I spent $100 and still got to raise awareness for the LGBTIQ+ community with rainbow lolly bags. My husband, unsurprisingly, approved much more of this. :P

When I asked my husband the same thing - "To you, what's the highest purpose your money can be spent on?", he said, "Protection." This likely explains why he has health insurance and life insurance, which we pay fortnightly premiums on, and why I am content with health insurance covered by my family's plan but don't have my own life insurance - yet. I definitely understand the value of it, but it seems like something that would only become a priority for me when we have kids.

It's also because my husband has a very stable income - he's been at the same company for 7 years and has a great relationship with his team, as well as a shit ton of leave. His company also offers a lot of work perks, including a career break of up to 1 year off! He also has a strong individual emergency fund.

Who brings home the bacon?

We both do!

We earn the same income - roughly. He earns $3000 p.a. more than me.

While I earn income from a few different income streams - my salary, rental, and miscellaneous income from book sales, photography and candles - he earns all of his income from his salary.

Both have their pros and cons. I have do more to earn almost the same amount he does, but I love having the freedom to explore my creativity and curiosity. Profit has never been the top motivation behind my passion projects, but a bonus. Plus, if I ever lose one income stream, I still have other income streams I can work on.

Photography, for example, is something I've put on hiatus and stopped actively advertising for - but if I lost my job, I would probably pick it up again since it provides a consistent stream of income (people are always celebrating special milestones!), plus it's fun and perfect for introverts.

On the other hand, my husband can earn everything from just one stream of income, so has less to worry about - and doesn't need to keep income records or file an IR3 individual income tax return. Of course, if he ever decides to make a side hustle out of his skills and hobbies, like guitar & fantasy writing, I'll be there to support him, too.

If you're in a relationship, I hope you've found some inspiration for your own joint finances!

Looking for more money inspo? Follow me on Instagram at @mindfulwithmoneynz.

Love,

Sophia

I quit my job (without another lined up)

A few weeks ago, I shared with some close friends that I was working through a 'job quitting list'. Working through a to-do list, I was going to quit my job - without another lined up.

If you are in the same boat, and if for any reason you are also quitting your job without another lined up, I wanted to share the things I did to financially secure my husband and I.

Work out current emergency funds

Worst case scenario: if I didn't secure a new job soon, how long could we survive on my current emergency fund?

This was what I asked myself.

I should say 'funds', because I accounted for the worst case scenario and took into account every savings account we held, from short-term savings to long-term savings. I counted in terms of fortnightly essential living expenses.

The answer? 33 fortnights.

A reassuring number, and more than I’d expected!

But I didn’t think I was going to take anywhere near 1 year and 4 months to find a new job, so that allowed us to do the next step...

Sit on it

We agreed that I would wait two weeks before I made the decision to resign.

The two weeks weren't easy, but I did distract myself by coming up with other small ways to reduce our expenses!

Switch car insurance

My husband drives a trusty, reliable Nissan that's 14 years old. With any car that is lower in value, we asked ourselves, "If we accidentally crashed this car, would it be one we would want to completely replace?"

The answer was no, so we reduced our cover by switching from a Comprehensive policy to a Third Party Fire & Theft policy. This means that we'd still be covered for damage we do to someone else's property, plus of course if it was lost in a fire or stolen. As you'd expect, this significant change in cover reduced our fortnightly premiums.

Combine life & health insurance

My husband has life insurance and health insurance at two different companies. It happened unintentionally, but we never gave it much thought. We did a quote online at a company that does both under one policy, and it showed that it would cost less!

Not only does combining insurance policies often work out to be more affordable, it also simplifies things by giving you only one company to deal with, only one policy number to remember, only one policy statement to read, and only one payment to pay fortnightly (or monthly, weekly or quarterly).

If you're also trying to reduce expenses, ask your insurance company which of your policies can be combined. Is it your home & contents insurance? Is it your house & landlord insurance for a rental property? Or is it life & health insurance? All of these are real combined insurance policies I have seen or sold, so it's definitely worth asking about!

Secure references

Most employers will ask for two job references. I wanted to have them ready when asked, so I politely asked some people if they would be willing to be a referee for me, including my previous manager from the recruitment company I was employed at while working as a tax consultant.

What I got back was a heartwarming reply:

'Hi Sophia, yes I remember you, and am more than happy to give you a job reference!'

How kind and reassuring!

A small withdrawal

As a financial buffer, I wanted to withdraw a bit of money for the future, just in case we needed it.

I decided to withdraw from my Kiwibank Notice Saver, a PIE savings account that allows you to withdraw money only if you give either 2 or 3 months notice in order to earn interest. Giving 3 months notice, I withdrew $2000 - a sum that will be deposited into my everyday account early August.

However, the title of this blog post could have also been I quit my job! (before I had another lined up) because... I won't be needing to use that $2000!

YAY!!!

I resigned with a 4 week notice period, taking 1 week of annual leave. My optimistic logic here was that, if I secured a job soon, I wouldn't want my new employer to wait an entire month for me to start.

Luckily, my last day present at work turned out to be just the right timing - even before I knew it. I trusted the universe but also worked extremely hard during my job hunting process, and it paid off.

Next time, I'd love to share with you what happened during this job hunting process, how I aced some of the interviews (and epicly failed one), and the exciting outcome!

It is still a stressful time, but I'm praying things will settle down soon, with a fresh start, a new door opening, and plenty of learning opportunities ahead.

My heart swells at the thought of the happier, more abundant, more purposeful path I am about to take.

If you are also in the same boat, I hope this post has helped give you some ideas and inspiration!

I wanted to share a quote that really helped me when I was terrified.

Was I making the right choice? Was I being too impulsive? What if I lose everything in search of something better? At the same time, doesn't every decision in life come with risk? What is the point of constantly talking about trusting your intuition and acting with faith if you don't put it into action?

Well, here is a beautiful, inspiring quote from Brené Brown:

“I'm just so grateful, because to feel this vulnerable means I am alive.”

Love,

Sophia

How COVID-19 impacted our personal finances

Hello friends,

I hope you are doing okay during these crazy times! Personally, I have been doing my best to stay sane and practise self-care while at home by doing more of the things I love: reading, writing, and taking online classes that excite me. (If you’re not from New Zealand, our country is currently in a 4 week lockdown, so everyone is staying at home, in our ‘bubbles’ – except for grocery shopping, essential services and enjoying local scenery).

Today, I want to share with you my thoughts & experiences on how COVID-19 has affected money and personal finances. I imagine that life looks very different for most of us at the moment, including how we handle our money and what our incomes & expenses look like. I hope this helps you if you’re looking for ideas – and the knowledge that you’re not alone.

How our incomes have been impacted

My partner’s income
My partner is definitely very lucky. Long before the level 4 lockdown, when the COVID-19 alert level was still at level 2, his workplace had already asked all their staff to work from home. To help make it easier? His company is giving every staff member $400 to set up working from home, then $40 a month towards our internet bill!

This generosity can probably be attributed to the fact that he works for the largest insurance provider across Australasia (proudly also my former workplace), and continues to operate as an essential business. We are very grateful.

My income
I don’t get any fancy perks, but I also feel lucky. Our workplace has all office staff working from home, and apart from a few, we now get to work 4 days / 32 hours a week (from 5 days / 40 hours a week), with pro-rata pay – 80% of our normal work hours for 80% of our normal pay. We do have the option of topping up the other day / 8 hours with our annual leave, which I’ve personally chosen not to do. Earning 80% of what I do now is something I had already anticipated and budgeted for when I was job-hunting for a 4-days-a-week job, and I am thrilled to have more flexibility!

My rental income
I haven’t changed how much I am charging – mostly because it is low to begin with. Likewise, I continue to pay the same mortgage repayments as I did before, so property-related income & expenses haven’t changed for me at all.

With our income now 100% of my partner’s income + 80% of my salary income + 100% of my rental income, our total net income has actually reduced by 8.6%. A reduction, but a manageable reduction – especially with a new budget. More on that later.

How our expenses have been affected

Food
Now that we have more time to cook, we’ve re-subscribed to Hello Fresh! We’re really enjoying our weekly boxes filled with inspiring recipes. Our standard 3 recipe box costs $95 a week, but additional recipes cost us $19.90 ($9.95 per person) – a great optional extra, like this week’s special recipes for Easter lamb & chocolate brownies! Overall, this new expense costs us $190 – 270 per fortnight. 

PS. This also means we rarely have to go to the supermarket, so lessens our exposure to others at a time when this is important!

Utilities
Unsurprisingly, fuel & public transport costs are now $0 while our power bill has increased. Since January 2020, our fortnightly power bill for 3 adults has been an average of $64.30. For the fortnight just been, it was $76.10. Considering my partner and I were actually away for 5 of those 14 days (while stuck in Queenstown), it’s worth noting that our power bill has already increased by 18%!

Our internet bill has reduced thanks to my partner’s work subsidy – so instead of $85 a month or $42.50 a fortnight, it’s now $45 a month or $22.50 a fortnight.

Purchases
We bought some new essentials for our home! We’re both very excited for our new 27″ curved gaming monitor – bought for WFH purposes (but also means I can use Chromecast in the bedroom while my partner plays games on the TV in the lounge – hooray). This cost $528 retail price, which I got a modest staff discount on. I also invested in plush new goose feather & down pillows and a queen-sized goose feather & down duvet. (I imagine sleeping with it will feel like being hugged by giant, fluffy marshmallows.)

I also spent $155 on an annual Masterclass subscription by getting the ‘buy one, get one’ offer for $310. Luckily, I asked on Instagram if anyone wanted the other membership, and a friend offered to buy it within a day!

How to manage your money / my personal tips

Right now, I feel like uncertainty around money is perfectly normal – and because of that, peace of mind should be our number one priority. If you feel the same, here’s what I am personally doing to future-proof my finances and give myself one less thing to worry about.

Prioritising liquid savings 
I normally send 20% of my pay to a bonus savings account, which is the type of account that earns you the most interest (base + bonus credit interest) and incentivises you to keep saving by penalising you if you make more than one withdrawal. At the moment, I’m sending my savings to an on-call savings account instead, and my partner is doing the same.

What’s the difference? An on-call savings account still earns you interest, but you won’t be penalised if you make withdrawals. A lot of on-call savings accounts are exclusively online accounts too – with fees for transactions at the bank – and since none of us are going out anyway, they’re perfect to use during this time.

Why prioritise liquid savings? Because right now, your savings locked away in a term deposit or any other long term investment isn’t going to benefit you if an unexpected expense comes up – or if you find yourself a little short for rent this month. Using an on-call savings account means you can still earn interest, but access your money at any time should you really need it!

Some on-call savings accounts: Kiwibank | BNZ | ASB | TSB | Heartland Saver

Kiwisaver
This crisis has hit our Kiwisavers hard, with everyone’s balances reducing by hundreds or thousands of dollars. But because Kiwisaver is just like any other investment, these ups and downs are natural and inevitable. It’s worth riding it out and not switching funds, because the minute you do, you are accepting and locking in your losses, rather than giving them time to bounce back.

Personally, I’m not worried about my balance – it has gone drastically up and down and in fact, is back to what it was before the crisis today! This is just me, though – I have put mine on 50% Balanced, 50% Growth so will weather more ups and downs.

If you are extremely worried about your Kiwisaver, or plan to withdraw your savings within the next 2 years – say for your first home – you can change your Kiwisaver fund to a low-risk Conservative fund – or a Defensive fund if you want to be really safe.

You can also free up more funds by reducing your Kiwisaver contribution rate – the amount that comes out of your gross salary. If you are on a high contribution rate, like 10%, dropping this down to 3% or 4% will of course have a much bigger impact than if you are currently on a 6% contribution rate. You can have a play around here to see what you’d be getting paid if you do change your rates. If it’s worth the hassle, definitely consider this option to give yourself more room to breathe during this time!

Refreshing our budget
Now that our income & expenses look so different, it’s time for a fresh new COVID-19 budget. I wrote a new fortnightly budget for my partner and I, using our new reduced income and updated expenses. Groceries? Down. Hello Fresh? Up. Transport? Down. Power? Up. You get the idea. It’s reassuring knowing that we can still save 20% of our income while paying our bills on time, and while I don’t want to make assumptions, I think it may be fair to say that most New Zealanders can, too – whether they’re at home or in Australia. We are so blessed.

I personally feel that refreshing our budget has given us peace of mind for our finances during this crisis, which is more helpful for alleviating anxiety than anything. So if you haven’t, you might also find it reassuring and encouraging, too.

Other options to consider

Cancel any subscriptions & services you aren’t using. Check your bank statement – are there payments coming out for things you aren’t getting any value out of? (We did this to our budget, but definitely want to keep Netflix and Spotify Premium for now!)

Reduce your insurance premiums by increasing your excesses, if you are spending most of your time at home (eg. if you’re not an essential worker). This will be different for everyone. I know that my car isn’t going anywhere in the next month and that even if it does, the risk of an accident is significantly reduced, meaning that it’s unlikely I would need to claim and pay a high excess. If you have enough of an emergency fund to pay an excess should you really have to, it may be worth making the most of lower premiums for the time being!

Pay later. I’m not one to encourage people to use services like Afterpay and Laybuy, because it’s easy to use them impulsively. But I feel that if you are financially struggling at this time and needing to buy essentials, now would be the best time to take advantage of them so you can keep more for your liquid savings.

I hope you’ve found this helpful! Here are some more resources you might be interested in:

COVID-19 financial support 

Free & confidential budgeting advice

Looking after your mental health & well-being

Love,

Sophia

You don't need to be rich to be financially stable

Today I'd love to share with you one of my biggest money beliefs: that you don't need to be rich to be financially stable.

Shortly after deciding to write this, I realised that being 'financially stable' is a very personal thing, and means different things to different people. So I asked friends, both in person and on Instagram: what does being financially stable mean to you?

The answers I got were fascinating:

‘Not worrying about how to pay for everything and living week by week.’

‘For me being financially stable means being able to go out and swipe my card without needing to check the balance.’

‘To have a better contingency fund in place so when big wants or needs come up it’s easy to afford!’

Whereas to the people I asked in person, it was more or less "Not living paycheck to paycheck."

What's my answer? For me, I would say that I feel financially stable now, but that I sure didn't before. But why? What has changed? Personally, I still look forward to payday and save up for big wants & needs (eg. diligently saving 40% of my income for our wedding last year; saving up for a new car & laptop this year because they're both old).

And it comes down to this: I don't lose sleep over money. When it comes to finances, I'm grateful to have peace of mind and not to worry much. Of course, it's not that I can afford anything my heart desires, but that if something comes up - a goal, a dream, a passion I want to pursue - I feel confident knowing that it is achievable. 

So what makes me feel financially stable now? If my definition is not losing sleep over money, what has changed to allow me not to worry and stress about it anymore? After all, I've had my financial ups and downs. Working 3 jobs at 21? Up. Moving to a new city on my own? Down. Landing my first corporate job? Up. Quitting a toxic job and spending the next year restoring my mental health and doing volunteer work? Down.

Here's why I believe that you can achieve financial stability, whether or not you consider yourself 'rich':

It's not about how much you make.

Financial stability sounds simple enough. Live within your means. Spend less than you earn. This sounds easy for most of us, but in reality, we're not truly spending less than we earn, even though we fool ourselves into thinking we're doing so. For a lot of us, buying a house, a new car, or a holiday has become more about if we can afford the monthly payments, rather than if we can genuinely afford to buy them at all.

What do I mean by 'afford'? For me personally, it means that everything you want and need to pay for can comfortably fit within 80% of your income. If you're earning $100,000 but spending $120,000, are you financially stable as opposed to if you're earning $50,000 and spending $40,000? What if you're earning $80,000 and you've proudly fit all of your expenses and financed purchases into $75,000, but you always feel like you have no room to breathe?

So how can you make sure you're on the right track to financial stability, regardless of your income? I do the following:

Look at the bigger picture.

It took me too long to realise that when I was broke, I was always living paycheck to paycheck because that was all I chose to see. I was only living in the now, and not thinking of the future. So instead of asking yourself if you can afford something right now, ask yourself if you can afford it over the whole year, and budget annually on top of budgeting your pay cycles. Take a holistic view. You might be rolling in it this month, but what about 6 months down the line? Will you be earning $3000 this month with only $1000 in expenses, but earn $50,000 over the whole year with $60,000 in expenses? Knowing that my entire year's savings & expenses fit within 80% of my annual income gives me a sense of financial stability.

Just because you can doesn't mean you should.

I have a love/hate relationship with 'enjoy now, pay later' schemes. I love using them to delay payments and in turn maximise credit interest on my bank accounts, but I hate the stories I hear of people getting into debt because they get suckered into buying things they don't actually want or need. (I also hate the excessive messaging of 'treat yourself' or that self-care is all bath bombs & champagne without actually working on yourself.)

So what do I do? Personally, I don't use Afterpay, Laybuy, and the like unless I can afford to buy what I want outright. That way, I know that I can make the repayments whenever I want plus never be charged late fees - which I read up on beforehand. It's all good when you're signing up for '4 easy fortnightly payments', but are you aware of the $10 late fee and potential additional $7 late fee for each if you don't meet them? Did you know that consistently having failed payments affects your credit score? I know it doesn't sound fun, but knowing what you're getting into will give you peace of mind - and a sense of financial stability.

Be true to yourself. 

I know how this sounds: "How does this relate to financial stability?" Being true to yourself is about spending your money on what you truly want, and what's in line with your values. As the book Love Your Life, Not Theirs says, so much of our spending comes from a place of jealousy and insecurity. We buy what we think will look good to others; we say yes to things we don't love or value to feel like the version of ourselves we wish we could be.

When you stop the comparison and people-pleasing, you realise you don't need to say yes to every drinks invitation; you don't need to buy a new outfit for every occasion, and you don't need to buy a fancier car than you care for (and can afford) to impress others. You are free to live authentically and be true to yourself; to spend that money on what truly makes you happy - whether that's art supplies, writing classes, photography gear, inspiring books, hiking gear or concerts and other genuinely meaningful experiences!

I actually think this is why I saved so much money and was so financially stable even when I was only working part-time in 2018 - I spent so much time at home, with noone to impress and no marketing or ads to see. I also hardly went on Instagram back then. That year I hardly bought anything apart from groceries & the occasional book - I wore what I had and even made my own skincare!

It's not about being the best. It's about being better than you were yesterday.

For me personally, an essential part of being financially stable is not being stagnant or falling deeper into debt - it's about consistently growing and moving forward. 

Y'all know I am a huge believer in the 80/20 rule, or living on 80% of your income and saving 20%. Sometimes it's easy to save even 40% when you've just gotten a bonus or expenses are low; at other times you might only be able to save 10% due to unexpected costs or a special event. Now that saving for our wedding is over, I am content with 20 - 30% every fortnight.

But some fortnights, I simply can't or rather, don't prioritise saving this amount. For example, the week of Valentines this year, my fiancé and I spent $300+ on dinner and a concert, while I also gifted him an online masterclass costing $155 and paid a $400 deposit for our holiday to India.

Even with this much spending on a special event and bucket list goal, I still saved 10%, à la The Richest Man in Babylon, which advises you to save every tenth copper. The idea is that no matter what, you're always working towards your financial goals. Can't do 20%? Do 10%. Can't do 10%? Do 5%. Either way, your savings are still increasing or your debt is still reducing, without requiring much sacrifice on your part. It's a win-win! Honestly, if I could go back in time and give my 21 year old self financial advice, it would be to save whatever you can, because at least you're still moving forward - rather than the mindset of 'It's so difficult, why even try?'

Another reason saving by percent and not dollar amount is the best way to save? It feels easy.

Say your fortnightly income is $1600. Does it seem easier to say 'Put $160 away into savings' or 'Put 10% - or 1/10th - into savings'? Both are exactly the same, but doesn't making the amount only a tiny fraction of your income seem so much more painless - like you're giving up less? It also works perfectly for people who are self-employed or earning an inconsistent income!

So there's my thoughts on what it means to be financially stable: it's not about being rich. It's about looking at your money holistically, spending in alignment with your values, and working towards financial stability - one step at a time.

I hope you've found this helpful! As always, you can leave your thoughts or ask me anything using the contact form.

Love,

Sophia 

Money habits I nailed in my 20’s

Today, I’m back with another reflective post. After sharing my financial regrets, I’ll be sharing with you mindful money habits I’ve done right – from my teens to mid 20’s.

Mindful Money Habit No.1: Starting work at an early age

I was a motivated young teen. At the age of 14, I decided on my own to start earning a regular income by delivering newspapers – the Eastern Courier and Property Press – around my local area of Bucklands Beach, Auckland.

At the age of 15, I started working at Warehouse Stationery – my first proper job. This means I’ve been working for over a decade! It might not seem like a lot, but it means I experienced ‘the real world’ sooner and had more time and experience in the workforce. Honestly, I’d give this as advice to my own children when I have them – to me, the earlier the better.

Mindful Money Habit No.2: Having multiple income streams

I’ve always worked multiple jobs or had multiple income streams; sometimes out of necessity, most times out of passion and curiosity. To make a long story short:

In 2012, I worked three part-time jobs (in beauty, in retail, and in a nightclub).

In 2013, I worked two jobs. The part-time beauty job had turned into my first full-time job; I later picked up waitressing & bartending at a restaurant & bar on weekends.

In 2014, I also worked two jobs: I’d switched full-time jobs and later on, started bartending at a club on weekends.

In 2015, I dedicated myself solely to one job working as an insurance consultant. It was my first corporate job and the one that changed much of my life.

In 2016, I was still at the same corporate job, but started thinking about turning my passion for photography into a side hustle. So, alongside this job, I photographed an engagement shoot, a graduation shoot, and an engagement party!

In 2017, I bought my house and started earning rental income by renting out the second bedroom. I had a full-time corporate job, and later, a part-time job in banking. I continued to shoot events here and there – in that year, it included a few graduations and a wedding. As such, I had two consistent streams of income and a third occasional stream of income.

Late 2017 – early 2018, I launched my candle shop on Etsy! 

In 2018, I worked part-time, continued earning rental income, continued making & selling scented soy candles, continued photographing events (this time I was popular with birthday parties), did a few research panels, and in November, started working for the government in a full-time corporate job. Messy? Yes, but it was a very fun and enlightening year, full of personal and spiritual growth.

Now, in 2019? Since leaving my government job near the end of the contract, I have two streams of income: a full-time job and rental income.

Why am I proud of this mindful money habit? Looking back, I’m proud of the fact that I’ve gained experience in a lot of different industries and types of work. I can say that I’ve worked in tax, sales, customer service (online, face to face, contact centre – inbound & outbound), retail, hospo, makeup artistry, general insurance, life insurance, banking, administration, and more. All of this is valuable life experience to me – the extra streams of income and extra value for my CV have been a bonus!

Mindful Money Habit No.3: Having a strong work ethic

I’ve always worked hard, both in terms of effort and time. For example, at my job as an insurance consultant, if I didn’t think you were being treated fairly, I’d literally do anything to make sure you were looked after, even if it meant repeatedly negotiating with underwriters. I like to think I always went above and beyond to make something complicated, simple and easy for customers!

My efforts paid off especially well in April-June 2016, when I won a $150 Prezzy card for being in the winning team in a competition for the most sales that quarter, and another $50 Prezzy card for individually making the most life insurance referrals. This coincided with one of our six monthly bonuses, based on our performance. To add to this, thanks to various incentives happening at the same time, I also won movie tickets and fuel vouchers! I rarely paid for fuel that year, as I spent little to begin with and simply accumulated fuel vouchers.

But I was very generous with my time, too: I volunteered for lots of overtime. Opportunities came up every week, and I would always volunteer to do additional hours without hesitation. This was great because overtime hours paid at 1.15! My office was 15 minutes walk from home, and most people going home from 4-5pm meant that my extra hours could be spent in a peaceful, quiet office mostly in solitude. When I was with a customer, I’d give it my all. But when I wasn’t, I could blissfully spend my time reading, writing, or organising my life (I spent a good deal of my downtime in the evenings planning my London & Paris trip itinerary).

I was also always willing to work public holidays if given them; especially because they were paid at 1.5 and always gave me a day in lieu I could use later on!

Mindful Money Habit No.4: Joining Kiwisaver from the beginning

Since I’d been a member of Kiwisaver since my very first job, I’d accumulated over 10 years of savings when I used my Kiwisaver first home withdrawal to pay for part of the deposit on my house. My whole working life, I hadn’t thought much of it – but I’m glad I’ve always stuck to it and kept consistent contributions for so many years! The only exception was my recent 6 month contribution holiday / savings suspension.

Another personal win is that in recent years, I’ve chosen to be conscious about where my Kiwisaver is invested, after much research into the ethics behind the scheme. Now that I’m aware, I’ll always have my Kiwisaver invested with an ethical provider.

Mindful Money Habit No.5: Personalising my bank accounts

Saving and spending money is psychological. This is why it’s easier for people to pay off debt starting with the smallest balance, rather than the highest interest rate (debt snowball vs. debt avalanche): it’s motivating and creates momentum!

A money tip I’ve often heard is to personalise your accounts – with names, pictures, and goals. For as long as I’ve had my BNZ account, I’ve always done this. Given I’m able to have up to 25 YouMoney accounts at once, I’ve found it best for clear record-keeping to have different accounts for everyday spending, flexible saving, long-term saving, as well as necessities – split into power, water, internet, insurance, food, events, and miscellaneous bills (where I like to keep a little ‘buffer’ every pay).

But what makes saving easier, and creates more resistance to spending, is also having accounts created for specific goals – such as ‘Melbourne’, ‘Japan’, or ‘Wedding’, with pictures that create excitement. Excitement is, of course, key to self-motivation. As someone who loves colours and vision boards as a way of manifesting, my accounts now look like a mini digital vision board for a well-organised dream life, slowly coming together.

While BNZ was the first to offer personalised accounts, I know that nowadays, you are able to do this at most other banks, such as ANZ and Kiwibank!

Mindful Money Habit No.6: Investing in myself

I’m proud of myself for learning and developing my candlemaking and photography skills, and having them to fall back on in case anything goes wrong. While I know I need to get myself out there more and actually promote my work, I now know for sure that people love both my candlemaking and photography work and are happy to pay for it, which gives me a strong sense of security (and warm fuzzies of appreciation). Rather than having to go out and get a part-time retail or hospitality job if need be (like in the past), I can confidently rely on myself rather than external circumstances. Skills can’t be taken away – only constantly refined and improved on to become even better.

Another bonus to this is that, as cheesy as it sounds, I am passionate about these skills. I happily put my energy into them, even when I’m not getting paid for them. And the more time and effort I invest into my side hustles and myself, the more I myself achieve personal growth – unlike putting more time and effort into working for a company. Plus, since I’ve learnt the ins and outs of income tax at my government job, I already know exactly what to do about my taxes if I ever dive into the exciting and scary world of self-employment!

If you have a talent or skill you are passionate about, why not use it? I’ve met people who speak 5 languages fluently, have played a musical instrument for over a decade, or are just exceptionally knowledgeable about a certain field – and I always ask, “What are you doing here?”

There are so many opportunities out there. I genuinely believe that if half the people in the workforce dedicated themselves to turning their passion, hobby or skill into an extra source of income, we could all work part-time instead of full-time and spend the other half of our time doing something we love and enjoy.

“Don’t ask what the world needs. Ask what makes you come alive, and go do it. Because what the world needs is people who have come alive.”

What do I want you to get out of this blog post? The inspiration to use your talents and skills to grow and to invest in yourself, and the knowledge that working hard and giving everything 100% is well worth it!

Love,

Sophia

I have no money and it’s all my fault: a guide to taxes

Hi friends,

It's time.

I've been contemplating writing a blog post on income tax for so long, but put it off due to the fact that.. Well, I couldn't write it with the same positive, optimistic tone of my usual blog posts. Why? Because it's a rather confronting topic, where most people realise that everything is their fault.

If you're a calm, humble person, you'll accept and learn from it. You'll even thank the person informing you for enlightening you of how income tax works.

If you're not, you'll throw a fit and scream at the officer at the other end of the phone as if they are personally responsible for your taxes and your tax bills.

Let's start from the beginning. In the early years of my career, I used to receive a tax refund every year. But one year, I didn't, so I asked my tax intermediary why.

"A tax refund every year isn't guaranteed," they told me. "It depends on if you have paid the right amount of tax throughout the year. If you have overpaid your taxes, that's when you get a tax refund."

I thanked them and moved on with my life.

(I now know that it's likely when my income went over the $48,000 mark and made me no longer eligible for the IETC - Independent Earner's Tax Credit. More on this later.)

Who knew that years later, I'd find myself working for the national tax department, explaining people's tax bills and tax refunds to them on a daily basis? I was recently very surprised to discover that even a friend who was an experienced chartered accountant didn't understand their tax bill - saying "Why do I have it? I only have PAYE income."

It's not the fact that they said it. It's the fact that they said it coming from a place where they were already assuming everything was IRD's fault. Some people, on the other hand, open-mindedly and kindly ask, "I don't get this - could you please help me understand?"

So here are some things I want to preface this blog with:

• Stop complaining about the government. You're not edgy.

• Stop trying to put the blame on the government, or your Kiwisaver provider, or your bank, or your employer.

• Stop thinking of the IRD as bad, greedy people. They are neutral and have no agenda at all. Most people don't realise that IRD doesn't take people's taxes - IRD only collects information about people's taxes, and fixes them up at the end of each financial year. In fact, there's a lot of things IRD wishes they could do, but can't, because they themselves simply do what the government tells them to do. But if you had to say whether IRD was 'good' or 'bad'? Definitely good. IRD's policies are inherently lenient and compassionate.

Let's get started!

Disclaimer: all figures are hypothetical.

You know the quote, "Life is really simple, but we insist on making it complicated?" That's how I see income tax.

The concept of income tax is simple:

You earn money.

You earn money and pay taxes on this money.

You earn money and pay taxes on this money in tiers.

You earn money and pay taxes on this money in tiers of 10.5%, 17.5%, 30%, and 33% (in New Zealand).

At the end of each financial year, if you have overpaid your taxes, you will receive a tax refund - hooray!

At the end of each financial year, if you have underpaid your taxes, you will receive a tax bill - boo.

Income tax only becomes complicated when people whine, complain, blame, and look everywhere except within themselves for the reason why things haven't gone their way.

However, is it really a bad thing to get a tax bill? You might think I'm crazy for asking that, but is it really?

Think about what would happen if everyone who underpaid their taxes got out of paying their tax bill. You would've paid your fair share of taxes all year, while they somehow got to pay less, and get away with it. That wouldn't be fair at all. The fact that everyone is subject to the same tax rates is what makes the system fair. Income tax pays for our transport, our roads, our hospitals, our libraries, our schools, our universities, our parks, and so, so much more. Everyday things we take for granted.

Your Student Allowance comes from taxes. Your Jobseeker Support comes from taxes. Your Working for Families comes from taxes. Your Independent Earner's Tax Credit comes from taxes. Your Paid Parental Leave comes from taxes. Your superannuation will come from taxes.

So I find it perfectly reasonable for the government to ask of you only your fair share.

Most people think that their tax bill is extra money they have to pay - it's not. It's money you should've paid and contributed to your country throughout the year, but didn't.

The simple truth is that if everyone did the right thing, nobody would ever get tax refunds or tax bills, because you wouldn't owe or be owed any money. It is in your interest for everyone else to pay their tax bill, and it is in their interest for you to pay yours.

I'd like to introduce you to an extremely handy, life-changing calculator.

On this calculator, you will be able to input your annual income, and it will tell you how much tax you're supposed to have paid by the end of this financial year (31/03/2020).

Why life-changing, you ask? Because IRD keeps a record of the taxes you have paid throughout the year, as your employer sends the information to them. If you are nearing the end of the financial year - January, February, March - and find that something seems terribly off, you can then make changes to rectify this ASAP and get things back on track.

If I was earning $50,000, I know that between 01/04/2019 and 31/03/2020, I should have paid $8020 in income tax.

However, say at the end of the year, I've only paid $7020 - leaving me with a $1000 bill.

Now why would I have only paid $7020?

Simple: I gave my employer, my bank, my Kiwisaver provider, or anyone else who taxes me, the wrong tax code.

When you start a new job, you'll be given one of these - a handy dandy IR330.

Most of you are familiar with what to do regarding your main source of income, but most people receive a tax bill because they've chosen the wrong secondary income tax code. You'll see them at the bottom, here:

Say I worked two jobs throughout the year, and my main source of income is set to an M tax code. However, I've chosen S for my secondary income tax code - which is wrong. If my total annual income is $50,000, I should be using the next one up - SH. This is the one for income between $48,000 to $70,000.

In this instance, using S would have been what created a tax bill for me and meant that I owed the government money at the end of the year.

However, not everyone's case is as simple as this - a lot of people get tax bills because they only think of their day job as their income.

In reality, you have more sources of income than you think.

Most people have these sources of income:

• Salary/wages (ie. their 9-5 day job)

• Bank interest

• Kiwisaver PIE income

So you might think, "I earn $50,000 at my day job - so my total annual income is $50,000!"

When in reality, including your bank interest and your Kiwisaver, your total annual income is $70,000+, pushing you into the highest income tier. And when that happens, if you have been using the tax rates for a lower income tier, that is when you also get a tax bill.

"But why is Kiwisaver counted as part of my income?"

Because it is your income. Your Kiwisaver income is PIE income (Portfolio Investment Entity) - the same type of income that term deposits are.

If you go to the bank and open a term deposit, you will earn PIE income - and get to choose when you want to take your money out, whether it's 3 months, 6 months, 12 months, or 5 years.

If you open a Kiwisaver, you will earn PIE income - but can only take it out when you are 65, or meet one of the four criteria (buying your first home etc).

When people have insisted that their Kiwisaver 'isn't their income', it's 'the government's income', I've been tempted to ask them:

"So if it's not your income and it's the government's, does that mean the government can just take your money? At that point you would insist that it IS your income, right?'

The bad news may be that you have to stick to Kiwisaver's rules if you have one - but it's not really bad news as Kiwisaver is entirely voluntary and optional anyway.

But the good news is that, hey: the $30,000 you have in your Kiwisaver is your income! How exciting.

This means that you have to pay income tax on the interest that you earn on your Kiwisaver throughout the financial year. As Kiwisaver income is PIE income, you will use a tax rate called a PIR - Prescribed Investor Rate. (Yes, you! You're an investor!)

PIR's are 10.5%, 17.5%, and 28%. Likewise, you can check out the link to see the income tiers and where each rate applies. So, if you have been using 10.5% all year, but you were really meant to be using 28%, you will, once again, end up with a tax bill.

I once spoke to a woman who got a tax bill because she had gotten a huge payout near the end of the financial year. After earning a steady monthly income all year, her income jumped to $30,000 in one single month in January.

She explained that she was going on maternity leave, and got a payout for the rest of the income she was entitled to for the year. This pushed her income to over $80,000.

As she'd been using M for her main source of income and and SH for her secondary source of income, her mistake was not taking into account that from April 2018 through to March 2019, she would be earning over $80,000 - not under $70,000.

Because her income was now over $80,000, this means that for the financial year, she should have used ST for her secondary source of income instead.

Of course, she argued and said that the $30,000 in January was 'not her income' and was her 'income for the rest of the year'. But would she have said the same thing if she were, say, applying for a mortgage, and trying to prove how much money she could earn in one financial year?

So the question is, did she get paid $30,000? And did she get paid in January? Both answers are yes. 

Remember that it's not when you earn the income, it's when you get paid. 

Now to an exciting part of tax - IETC!

Independent Earner Tax Credit is a tax credit for people earning between $24,000 to $48,000. If you are earning between $24,000 to $44,000, you get $10 per week - $520 a year. This abates if you earn between $44,000 to $48,000.

People who are eligible for the IETC should be using an ME tax code; but if they have been using an M tax code all year, they get all of this back at the end of the financial year - hence why they think they are extremely lucky to get a free $520 every year when really, it's their IETC!

I remember helping one of my colleagues generate people's IETCs once. I went to their financial years 31/03/2017 and 31/03/2018, made some adjustments. Bam! $1040 for them. "Sophia, you literally made money come out of nowhere!" I'll be honest, it felt pretty awesome to send people large amounts of 'free' money on a daily basis.

I'd like to sum up this blog post with a few made-up FAQs:

Why did I get a tax refund?

Because you overpaid your tax.

Why did I get a tax bill?

Because you underpaid your tax.

How did I underpay my tax?

You used the wrong tax code when you gave your IR330 to your employer.

Or you gave your bank the wrong tax rate (called 'RWT on interest') - maybe you gave them 10.5% when you should've given them 17.5%.

Or you gave your Kiwisaver provider 17.5% when you should've given them 28%.

Or maybe you used the wrong secondary tax code, and used SB when you should've used S.

Maybe you changed jobs throughout the year, but forgot to take into account that from April through to March, you'll now have earned enough income to move up an income tier.

What is 'tax on taxable income'?

The total income tax you should've paid on your earnings from April through to March.

What are 'tax credits'?

The total income tax you have already paid on your earnings from April through to March.

They are also things that reduce your tax on taxable income, eg. your IETC.

What is PAYE?

Income tax + ACC.

Your employer takes PAYE out of your earnings; most of it goes to IRD for your income tax. 1.39% goes to ACC so that if you somehow break your leg or otherwise injure yourself at work, you can be paid out and financially looked after.

Only the income tax portion contributes to your income tax credits at the end of the financial year. The ACC portion is sucked into a black hole and gone forever. (Unless you make an ACC claim, of course.)

What is 'residual income tax'?

Hint: residue. It's the income tax that's left over that you need to pay - the difference between what you paid, and what you should've paid. This is your tax refund or your tax bill. If your residual income tax is a credit, you have a refund. If your residual income tax is a debit, you have a bill.

What is provisional tax?

Income tax split into 3 equal instalments throughout the next financial year because your residual income tax is over $5000. Meaning that the government's thought, 'Hey, you seem to need some help making your taxes manageable; here, we've split it up for you for next time!'

Note: it's not additional tax. It's just your ordinary income tax, structured in a way that's intended to be more helpful to you.

How can I pay my tax bill if I can't afford it?

Do an installment arrangement. You will receive your tax bill between April to July; your tax bill will be due between February to April. This means you have months to make easy, manageable, interest-free repayments. Your interest - the last rate I was aware of was 8.22% - only starts when your installments extend past the due date.

You can pay weekly, fortnightly, monthly, and even make extra repayments whenever - reducing your interest if any! Voila!

If you are seriously struggling and can't pay even $10 per week, you can apply for financial hardship. A very compassionate policy. To stop others from taking the piss out of it, you have to declare and provide evidence of your financial situation. That's what makes it a fair, honest system for you, for me, and for everyone who works hard.

How should I spend my tax refund?

Start your dream business. Travel the world. Shout your entire office lunch to show them how much you love them. Buy 10 cats!

And remember: IRD staff are human beings with feelings, who get tax bills, too.

Love,

Sophia