Life Update: Cost of Living
21 Sep, 2025
Is life really more expensive for my whānau of three at the moment?
I honestly wasn’t 100% sure. So, I decided to find out - in detail.
Why? Economically speaking, it feels incredibly gloomy at the moment. It would be easy to fall into that mindset, which, as an optimist, I am loath to do. So, the best option is to find some facts.
To the best of our ability, Jonny and I have always tried to ‘government-proof’ our finances, by which I mean, irrespective of the government of the day, I’ll try to ensure that what they do has as little effect on what we do. This strategy prevents us from having to react and adjust course constantly, but over the last 18 months, it has become increasingly challenging. Managing personal finances is a delicate art of pulling various income and spending levers, and I wondered if all that I’m doing is working.
To calculate what our life currently costs, I pulled up two full years of spending and earning data and compared them; the results were interesting:
YES, life really has been more expensive. We have spent $6,000 more in the last 12 months than in the 12 months prior.
However, we actually earned $11,000 more, too.
Digging deeper into this revealed that there were a few spending categories over which we had no control, and they had increased; however, for the most part, and despite rising costs, we did have a say in what we chose to spend. It also became clear that while we have successfully mitigated the rise of expenses in some areas, we have decided to/been forced to allocate more funds in others.
For any of you still stuck in the trenches of having $100 of income and $110 of expenses, stick with it; you can improve your situation, but it takes persistence and time. Jonny and I have had a good decade now of making more good financial choices than poor ones, and slowly our situation has improved, which means that in the current economic climate, we can adapt and cope OK.
I’m not loving it, but it’s going to be OK.
For the last 24 months, I’ve been hearing the relentless kōrero about the increase in the cost of living. And instead of sitting like a deer in the headlights, early on, we decided to try to do something about it. No one is coming to top up our bank account; it’s all on us. We regularly take a good, hard look at ways to trim our spending and increase our income, and I’m relieved to say that this consistent focus has helped. Our renewed focus came on top of the years of attention we had put in before this current economic downturn, which had made us much better able to withstand rising prices today.
Below is a side-by-side comparison of two years of spending (September to August). What do the colours mean?
RED is for expenses we can’t avoid
ORANGE is for nice-to-haves
BLUE is the amount we have added to our investments during that period
GREEN shows income
Our goal has been simple: Reduce orange and red and increase blue and green.
PocketSmith showing a side-by-side comparison of two years of earning and spending.
To further demonstrate our behaviour change, below shows a more typical month for us at the moment. In real time, we can see that we’ve trimmed our spending right back.
PocketSmith showing a more typical month for us.
If I told you I was very systematic about this, whipping the debit card out of Jonny’s hands if I suspected he was about to overspend in a particular area, I would be lying. Which Jonny is relieved about. Instead, we view managing our household finances as juggling 23 different expense categories, ensuring that none of them are out of whack. We don’t set complex budgets for spending; instead, we work as a team and reduce spending where we feel it is necessary to do so.
We have such a disciplined focus because we are not just trying to keep up; we are trying to get ahead. And to us, getting ahead long term means living on less than we make, and investing the difference,
Once again, the budgeting app PocketSmith has been our main money tool. It is sorting thousands of separate bank transactions into categories. It’s a lot, but that's personal finance for you, money is constantly moving in, out and around our accounts. I use this data to gauge general trends and ensure we are working within the guardrails we’ve set for ourselves. I don’t have the time or the interest in micromanaging our money, but with this tool, I can focus whenever or wherever I want.
In January, based on the previous year’s spending, plus a dose of common sense, I set our budgets for the year. Broadly speaking, we make what we consider to be a good income. It is enough to cover our expenses, so it’s not a matter of having to live on a strict budget. However, again, and I am sure you can relate, lifestyle creep, rising costs of goods and services, frittering away money, and simply not paying attention can easily creep in, meaning that things have certainly felt financially tight on numerous occasions.
While in some areas costs have absolutely increased, I can’t blame the cost of living for all of our increased spending, and I frequently give myself a reality check if I try.
I wanted to answer my questions: Is life really that much more expensive for my family? Are we in crisis? And if we are, how will I fix it?
Before I jump into a list of our biggest expense categories below, I want to make it clear that so much of our spending is entirely within our control. But sometimes, to control it, we have to make some bold choices. For example, if your rates or insurance feel just too high, it is only you who is stopping you from moving to a cheaper location. Same with your mortgage. There are cheaper houses throughout New Zealand that you could buy instead. Do you want to move? Probably not. But could you move? Well, yes. We love to holiday, but we are also in the midst of some expensive car and home repairs, meaning that international travel is not currently in our budget. But we can factor in some local trips to Queenstown and Fiordland, given we only live an hour away.
Below is a list of our biggest expense categories. Even those that appear fixed have some wiggle room.
Income and Spending
Broadly speaking, we have spent more and earned more in the last two years.
| 2023/2024 | 2024/2025 | Change | |
|---|---|---|---|
| INCOME | $106,000 | $117,000 | ⬆️ $11,000 |
| SPENDING* | $104,000 | $110,000 | ⬆️ $6,000 |
* I include our investments in our spending. More on this below.
Spending Breakdown
| 2023/2024 | 2024/2025 | Change | |
|---|---|---|---|
| Groceries | $15,500 | $13,500 | ⬇️ $2,000 |
| • We decreased our spending by meal planning, eating in season, eating very little meat (for health reasons), and shopping from a list. | |||
| Electricity | $2,400 | $2,700 | ⬆️ $300 |
| Diesel heating | $2,000 | $1,600 | ⬇️ $400 |
| • We are home 24/7. While electricity prices have risen, diesel prices have fallen. | |||
| Petrol | $3,500 | $3,500 | No change |
| • You drive longer distances to go places when you live in a rural area. However, we have made an effort to take fewer trips or walk more into town. | |||
| Gifts/Donations | $1,100 | $2,000 | ⬆️ $900 |
| • A large whānau and numerous good causes to support have meant this cost has crept up. It’s one we are keeping an eye on. | |||
| Pet care | $3,300 | $300 | ⬇️ $3,000 |
| • Why the drop? Our beautiful dog, Blue, died. What an awful way to save money. We now foster dogs, at little to no cost to us. And (fingers crossed) the cat remains healthy. | |||
| Holiday | $22,000 | $11,000 | ⬇️ $11,000 |
| • With no more big holidays planned in the near future, this will continue to drop. Cutting travel is an easy way to save, and we are choosing to travel close to home instead. | |||
| Clothing | $2,100 | $1,700 | ⬇️ $400 |
| • We replace the basics and/or buy second-hand. Plus, I genuinely don’t enjoy clothes shopping. | |||
| Dining out | $2,300 | $1,800 | ⬇️ $500 |
| • Eating at home (while still managing to be social) sees this number continuing to fall. | |||
| House maintenance | $2,300 | $1,900 | ⬇️ $400 |
| • DIY and regular maintenance keep these costs lower. A sinking fund covers one-off, bigger bills, such as replacing our hot water cylinder, which we are doing soon. | |||
| Health | $7,800 | $10,200 | ⬆️ $2,400 |
| • Bits wear out with age! We have a sinking fund, plus a minimum health insurance plan, so we can afford to pay for faster healthcare. My decision to spend $10,000 over a 2-3 year period on my teeth has significantly increased this cost. | |||
| Health Insurance | $2,800 | $3,300 | ⬆️ $500 |
| • We continue to review our insurance and excess coverage to keep premiums down, but we expect them to continue increasing. | |||
| Home/Contents Insurance | $2,600 | $2,500 | ⬇️ $100 |
| • Living in a part of the country less prone to natural disasters, plus lowering our contents coverage, has reduced premiums. | |||
| Car Insurance | $1,600 | $1,300 | ⬇️ $300 |
| • Reviewing what our cars are now worth and insuring that amount reduced our premiums - despite us adding a young driver. | |||
| Car maintenance | $900 | $6,000 | ⬆️ $5,100 |
| • We maintain both vehicles extremely well, but as the kilometres increase, things just wear out. | |||
| School Fees | $1,500 | $1,700 | ⬆️ $200 |
| • We choose to pay the school's donation, plus extra-curricular activities as required. | |||
| Phones/Computers/Subscriptions | $3,500 | $7,500 | ⬆️ $4,000 |
| • Technology wears out. We waited till the bitter end, got the best deal, and then reluctantly replaced phones and laptops. | |||
| Council rates | $3,700 | $4,500 | ⬆️ $800 |
| • Absolutely nothing we can do about this. We pay our rates weekly to even out the costs. | |||
In a spending category all on its own is investing. By trying to get our income up and our costs down, we invested as much as we could into our Total World Fund ETF. We can’t take our foot off the gas here, currently investing ~30% of our take-home pay, and forever trying to push this higher. Invested money makes money over time. And there is no time like the present to invest.
| Investments | $21,100 | $31,000 | ⬆️ $10,000 |
| • Each time we saved money, we did our best to invest that money for future growth. | |||
Summary
Are we in crisis?
No. Over the last two years, we have been paying attention to both our income and expenses, and these steady good habits have helped mitigate the impact of the rising cost of living.
We’ve also enjoyed the last two years.
Has life cost more?
Yes. Money saved on travel has been spent on car repairs. Health and tech have cost us a bunch, but both are essential. Rates have gone up, but pet care has gone down. It’s a mixed bag, and I suspect if you dug into your own living costs, you would find the same.
How did we make extra income?
Jonny and I continue to earn income in multiple ways. He earns PAYE income, and I am now self-employed, working on The Happy Saver, and this income stream continues to grow. We earn dividends on our investments, and interest on cash in the bank.
One of the key areas of income growth has been the challenge we set ourselves to earn an additional $10,000 per year ‘somehow’. I didn’t want us just to sit still and say “poor us”. I wanted to DO something. We decided to say YES to any opportunity to make money: Jonny has taken on freelance design work, I happily fill in if required at the job I left last year, I’ve done paid research gigs, plus we have sold stuff around the house and turned that into cash. It all slowly adds up over the year, and I encourage you to give it a go yourself.
No doubt about it, if costs are rising, and income is not enough, you have to do what you can to bring in more money.
And with headwinds ahead, namely assisting our daughter through university, the focus will remain on paying attention to our pūtea.
Habits that have contributed to our success:
We track our net worth monthly, and because of our ETF and KiwiSaver investments, we are now seeing significant year-on-year growth in our net worth. If we didn’t have such a focus on a bigger prize - financial independence - I think I might feel dejected in this current economic climate. Managing our money well keeps me focused and on track.
We use PocketSmith to do 99% of the heavy lifting of categorising transactions in real time. If we were to input our data manually, it would be constantly out of date. Instead, all of our time is spent using the data to tweak our behaviours.
I also track our potential monthly passive income from our investments, which tells me precisely when we can retire. Investment Value x 0.04 = Annual Passive Income.
We use Sinking Funds for known unknowns: Health, holiday, school, car repairs, power bills, pet care and donations, etc. These bank accounts relieve the pressure of handling one-off costs.
Menu plan and shop from a list. Don’t visit the supermarket daily!
Earn more. Spend less.
Go without and make do.
One saving that can’t be overlooked is giving up drinking alcohol at home. We occasionally have a drink when out, but this change was mainly for health reasons. We just went off it, and it kind of went off us as well!
We are mindful spenders, and while we do spend a lot of money, we don’t waste money. It is very rare for us to regret a purchase, which clearly shows we have thought about it.
Getting out of debt and STAYING OUT OF DEBT has been huge for us. I don’t care what your debt is, whether it's interest-free or not. Debt represents a chunk of your pay cheque going to someone else, meaning that it is no longer yours to manage.
I’m very mindful of whose advice I seek. I always ask, “What is in it for them”? Banks and financial institutions are in it to make money from you. Never forget that.
Getting very clear on our numbers and keeping our finances SIMPLE has reduced financial uncertainty. This applies to both my personal finances and those of The Happy Saver, which I use Hnry for and can’t speak highly enough of. I moved to what I think of as an “always accounting” system, where every dollar earned is immediately fully taxed, and this has given me absolute certainty of my net income. It has been a game-changer for me.
Finally, we remain flexible because nothing ever stays the same.
When I step back and look at the facts, yes, some areas of life have become more expensive, but not all. The trick has been to focus on the parts I can influence and what we choose to spend on, how we structure our days, and what really adds value to our lives. By keeping busy in ways that don’t drain our wallets and by regularly checking in on our pūtea, we’ve managed to steer our whānau in a direction that feels right for us. That doesn’t mean it’s always easy, but it does mean it’s possible.
So, is life really more expensive for my whānau of three right now? In some ways, sure. But the bigger picture is that we’re still in control of our choices, and that makes all the difference. My hope is that you’ll take a moment to reflect on your own situation - not the headlines, not the latest political noise, but your actual life - and figure out what levers you can pull. Because even when times feel gloomy, there’s usually more within our control than we first realise.
