Working for a living

12 February 2018

February, week 2 in The Simple Home

While I knew from a young age that I would work when I was older, it didn’t occur to me until much later how vital work is. Work builds character, families, neighbourhoods and nations. I can say without a doubt that I am the person I am because of the work I’ve done – both in the work force and at home. The daily effort of earning a living and keeping a home operating builds layer upon layer of experience, skill, confidence, trust, character, responsibility, understanding and common sense.

There are several distinct stages we go through in life, each has it's own rewards and challenges and going through one stage often helps prepare you for the next.  I've written about this in The Simple Home but I'll highlight how each stage is slightly different and the financial aspects that can make a real difference as you grow older.

1. Starting out 
Moving from school/university into the work force will enable you to develop a whole new set of skills that will help you live well throughout life. Try to develop the habit of saving straight away. To do that you'll need to know exactly what you earn and spend, and how your money is used. Try to develop thrifty habits early, budget, save, do your fair share and work for what you get. You'll start acquiring assets now but don't overdo it because spending every cent you earn will see you working hard just to keep up with your bills.

Find a spending ratio that works for you, using this is a guide: spend about 60 per cent of what you earn on essentials – rent, food, transport and so on – about 20 per cent on things you want, and about 20 per cent on savings. The savings component might be divided between a few different accounts: emergency fund, house deposit and travel fund, for example.

See if you can get a better deal with your electricity, gas, internet, phone and insurance providers. This should be one of the things you routinely work on every year.

If you can go through your twenties without incurring major debt, you’ll be well ahead in your thirties. That includes credit card debt, which sometimes starts off innocently but can spiral out of control. Always remember the transient nature of fashion and holidays because you won’t like having to pay for them long after they’ve lost their shine.

2. Single life 
Single life includes young singles, single parents and divorced singles whose children have left home. In this stage, there will be differing levels of assets, but no matter what your age or financial status, a budget will be beneficial and you should be saving.

If you form a relationship with someone, make sure their values are similar to yours. It’s very difficult living a simple life if your partner is intent on the opposite. It will be almost impossible to live simply and frugally if the person you love has no issue with living beyond their means. Have those talks early. Hopefully you’ll discover both of you want the same kind of future and then you’ll be able to share the enjoyment of planning a life together.

The focus on this stage is to establish or re-establish good long-term budgeting and savings habits.  You need a realistic budget you can live with.

All through your working life, have only one superannuation (retirement) fund. Give the details of it to your new employer when you start work. This will maximise the potential of your investments and save on fees.

See if you can get a better deal with your electricity, gas, internet, phone and insurance providers. This should be one of the things you routinely work on every year.

3. Living on one income and stay-at-home-parent families
Being a homemaker gives you a practical way of contributing to the family's financial security. You and you partner should discuss what your saving priorities are and come to an understanding about cutting back on spending.  The partner who goes out to work and the children who go to school, should help with the savings effort by taking lunch and drinks so there is no added expense.  Then it's up to you to make the most of the assets and money your family has.

If you're the partner who is working at home, make sure you’re named as co-owner of your family assets. Check it this month and fill in the paper work if you need to add yourself.

See if you can get a better deal with your electricity, gas, internet, phone and insurance providers. This should be one of the things you routinely work on every year.

Teach your children to shop for food and cook, not only because they’re skills they should have but it will teach them about local produce, nutrition and the cost of food.

If you haven't started a budget yet, do so this month. Work out a shopping strategy so you'll consistently get the best value for money. This may mean giving up your favourite brands or supermarkets and discovering new ways to save money. Take on these new challenges with enthusiasm and be open to changes that may help you manage your family's budget. There are hundreds of ways of doing that, just read through my blog or books if you need ideas and make sure you read the comments here too. They hold a lot of treasures.

4. Working couple with children
When both partners are working, there is a lot less time available for home-based, money-saving tasks. That’s where organisation, routines and working as a team come into play. Menu planning, permanent shopping lists, family calendars, slow cooking and batch cooking will all help you live simply even when you have less time at home. There will be a lot more information next month about food, grocery shopping, local produce, cooking from scratch and how to introduce them into your busy life. In the meantime, see if you can get a better deal with your electricity, gas, internet, phone and insurance providers. This should be one of the things you routinely work on every year.

Work out who will do what housework, and expect your children to help. Even small children are able to assist if you give them tasks they can manage. Make sure you allocate family time too. It doesn’t have to be expensive: plan a movie night, a swim at the beach, a hike, or a bike ride. Don’t get into the habit of giving your children expensive clothes, gifts or holidays, but everyone should have a small amount of pocket money. All your children want when they’re growing up is to be loved and to spend time with parents who enjoy being with them. There will be a happy balance between work and family somewhere; you have to find it.

A lot of balancing goes on in this stage of your life. You want to save or pay off your mortgage while finding joy and happiness in your everyday life. There will be highs and low but through it all, remember you’re not alone, and you don’t have to give your children "the best" for them to be their best. Value this time because there will come a day when the kids fly the coop and it’s just you and your partner again. And maybe then you can spread your wings again.

5. Retirement
The best way to prepare for your retirement and older age is to have a home you can live in; be debt-free or close to it, know, or be ready to learn, the things you want to do after you leave work; and have family, friends and hobbies to fill your days. When you get to this point, you will hopefully have paid off the mortgage or be ready to downsize to pay it off. Nothing you can do or plan for will help you in later life more than owning your own home. If you’re renting and know that you’ll be renting in the future, try to find a stable rental, close to family and friends. If you can get a long lease, that will be a bonus.

Up until now, you'll have been working on saving and paying off debt, now your focus will move more towards management of your savings and whatever income you will have in the form of pensions or payments from superannuation/retirement plans/401k.

Make a new budget for your retirement years taking into account any government concessions you'll receive.  In Australia, these will include government help with phone, electricity, health, medications and public transport, and make sure you apply for a Seniors Card.

See if you can get a better deal with your electricity, gas, internet, phone and insurance providers. This should be one of the things you routinely work on every year.

Here is a link to a post I wrote about retirement that I hope will help you settle into this stage.

This is quite a long post so I'll include The Gender Gap in next week's post.