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Greg Brown and Holly Smith

Greg who is 35 and Holly (30) are not married but have been partners for the past 3 years.  They have three children, Nat who is 2 and twins, Owen and Peter aged 9 months. 

Greg has a son, Ross age 12, from a previous relationship.  He pays child support to Ross’ mother but is not actively involved in his upbringing as Ross lives in another city.

Frankly, they are struggling financially.  Greg earns $39,000 but Holly had to give up her part time job once the twins arrived.  They have no savings and survive from pay to pay.  At times, they have difficulty paying the rent.

Greg wrote a will when he turned 18, just as he set off on OE, leaving everything to his parents.  Holly doesn’t have a will.  They had intended to fix this, but with the twins arrival, they never seem to have a spare moment.

Issues for the family

The following section sets out some of the main issues for each of the families that would need to be discussed with a financial adviser and some of the possible solutions or options to be considered.  Specific solutions would require much more detailed knowledge of each family’s finances as well as discussions about their goals and priorities.  Even so, this shows just how many issues there are to be considered and where the advice of experts may be helpful.

Greg and Holly acknowledge that they are struggling.  They are to be congratulated for having avoided any debt.  How can they improve their situation?  What are their goals?

• To increase our family income to improve our current financial position.
• To establish a cash emergency fund.
• To be able to own a home and stop renting.

The start point has to be a proper budget, then considering possibilities for increasing income.

In terms of the “what ifs” a basic insurance review will need to consider:

• Tenant’s insurance to cover their personal property.
• Trauma life insurance on them both.  As they are relatively young, life insurance will be relatively cheap.  Holly needs to have insurance as if anything happened to her, Greg would need funds to pay for childcare.
• Ownership of the life insurance policies should be held by the other person, who will need rapid access to the funds.
• Income protection insurance for Greg would be ideal, but is probably not affordable at this stage.

Greg’s will is outdated and Holly doesn’t have a will.  As they have been in a relationship for three years, the Relationship Property Act will apply and override the provisions of Greg’s will.  However, this is messy and would delay settlement of an estate, so it is important that they write wills and EPAs.

In the longer term, Greg should join KiwiSaver to take advantage of the employer and government subsidies, but they need a more stable financial position first.

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