Key life events to reset your budget

Transitioning from study or home life to your first full-time job brings a steady income and if you’re also moving into your own place, new expenses like rent, transport and utilities. 

While you’re setting up that first budget, consider protecting your ability to earn. Income protection cover or mortgage repayment cover (which works for renters too) could step in if illness or injury forces you off the job, allowing you to stay in your home and pay the bills while you recover. Chat with a Chubb Life Insurance Adviser about tailoring a policy to your new career stage. 

Quick considerations:
 

• Track your net income versus essential expenses (rent, groceries, transport).
• Consider how much you have remaining after expenses are paid and if you can afford to automatically direct some of your income into a savings account each pay day.
• Explore Income Protection Insurance or Mortgage Repayment Cover to protect your income. 

If you're moving in together or getting married, and are thinking about combining finances with your partner, you might want to tally up your combined incomes, expenses and debts, then update your savings goals. Remember to revisit your emergency fund to cover living costs for two. 

Marriage is a good trigger to review your current insurance situation.  Make a plan together about what you’d do if one partner had a major illness, like cancer or a life-changing injury. Things you could explore:

• Income cover could provide regular payments while you’re unable to work, due to injury or illness, allowing you to focus on your recovery without worrying about how to pay the bills or maintain your current lifestyle.
• Trauma cover could provide a lump sum payment if you’re diagnosed with a specified serious illness or condition, which you could use to cover additional treatment costs, home alternations, rehabilitation, debts or even day-to-day expenses.
• Specific injury cover could provide a lump sum payment if you sustain one of the covered injuries as a result of an accident, to help cover expenses while you’re recovering.  

Quick considerations:

• Decide on a clear budget that you both agree on.
• Increase your emergency fund to cover combined expenses.
• Review your insurances, adding or adjusting cover as needed.   

Welcoming a baby brings excitement and extra expenses. From one-off buys like a cot or pram, to ongoing costs such as nappies, childcare and health checks, you’ll want to plan ahead. Factor parental leave payments into your budget and decide whether one or both parents will return to work, and if household income is likely to change. 

It’s also time to reconsider your family’s protection. As your circumstances change, it’s a good time to review your insurances. Consider the following:  

• Income cover: to protect your income. This provides a regular payment  while you’re unable to work, due to injury or illness. This allows you to focus on your recovery without worrying about how to pay the bills or maintain your current lifestyle.
• Trauma cover: to cover unexpected expenses. This provides a lump sum if you’re diagnosed with a specified serious illness or condition, which you could use to cover additional treatment costs, home alternations, rehabilitation, debts or even day-to-day expenses. 
• Specific injury cover: to provide funds if you get injured. This provides a lump sum if you sustain one of the covered injuries as a result of an accident, to help cover expenses while you’re recovering.
• Life cover: can give you the peace of mind that your family will be looked after when you’re gone. This provides a lump sum if you were to pass away.  

Quick considerations:
 

• Consider setting up a “baby fund” with automated transfers for gear and early childcare.
• Consider setting up a bank account for each child and transferring a little savings each week to use towards that big expense when they’re older (eg their first car, or tertiary education).
• Come up with a list of things you’d consider as non-essential spending.
• Review your insurance cover, and considering adding or updating your income cover, trauma cover, specific injury cover and/or life cover. 

Putting your foot on the property ladder is often one of the biggest financial life events New Zealanders experience. Beyond the deposit and legal fees, “must-do” renovations and unexpected maintenance bills soon crop up after you move in. Make sure your budget can handle both the initial outlay and ongoing home-ownership costs like rates and insurance. 

When you take on debt, it’s important to think about how you might be able to take care of it in order to retain the asset (your house). You may want to consider how you could help support yourself if you're having trouble servicing your debt: 

• Income Cover to protect your salaries. This  provides a regular payment while you’re unable to work, due to injury or illness, allowing you to focus on your recovery without worrying about how to pay the bills or maintain your current lifestyle.
• Mortgage Repayment Cover to cover your mortgage repayments. This provides a regular monthly benefit to help cover your mortgage repayments, rent or to compensate you for lost income if you were to become disabled as a result of illness or injury. 
• Trauma cover to cover unexpected expenses. This provides a lump sum if you’re diagnosed with a specified serious illness or condition, which you could use to cover additional treatment costs, home alternations, rehabilitation, debts or even day to day expenses. 
• Specific Injury Cover to provide funds if you get injured. This provides a lump sum if you sustain one of the covered injuries as a result of an accident, to help cover expenses while you’re recovering.   
• Complete Disablement Cover to meet longer terms needs in the event of a total and permanent disability: This provides a lump sum if you become completely disabled through illness or injury, so that you can have the support you need to focus on your new way of life. 
• Life insurance can give you the peace of mind that your family will be looked after when you have gone. This provides a lump sum if you were to pass away or be diagnosed with a terminal illness.

Quick considerations:
 

• Calculate total housing costs. For example, mortgage repayments, rates, contents and home insurance.
• Take the time to research how long it will take to pay off the debt and what repayments you can afford. There are various online resources. 
• Set aside a “maintenance buffer” for unexpected costs.
• Review your insurance cover, and consider adding or updating your Income Cover, Mortgage Repayment Cover, Trauma Cover, Specific Injury Cover, Complete Disablement Cover and/or Life Cover. 

Shifting from a pay cheque to savings withdrawals or KiwiSaver income requires a fresh approach. Get advice about how much you need each month and set a sustainable drawdown rate. Remember to factor in new costs like increased medical bills or extra heating during cooler months, as well as the need to replace larger assets (like cars) over time. 

At this stage, large life or income protection policies may no longer suit your needs. Consider opening a savings account for end-of-life expenses (such as funeral arrangements) or taking out a new Funeral Cover policy to settle end-of-life costs. You may want to consider reducing any other life insurances held to reflect your reduced needs, for example if your children have left home and your mortgage has significantly decreased or been repaid.

Quick steps:
 

• Calculate your post-retirement expenses and required retirement income and withdrawal rate.
• Review your insurances and consider if putting funeral cover in place can help look after your final expenses.

A serious diagnosis or accident can throw everything – including your budget – on its head. When that happens, focus your spending on essentials and pause non-essential payments. Build a short-term recovery budget that covers living costs while you concentrate on getting better.

Insurance such as trauma cover pays a lump sum on specified conditions, giving you freedom to choose treatment and pay bills. Income protection steps in if your ability to work is impacted due to illness or injury, and with premium cover your ongoing life insurance premium payments will be waived while you’re eligible to claim, so you don’t lose cover at a critical time.

Quick steps:
 

• Prioritise essential bills and pause discretionary spending.
• Check eligibility for trauma cover benefits.
• Check eligibility to claim income protection  to maintain cashflow if you’re unable to work.