Growing up in a working class family, it was never an option to not rely on some sort of hand out from the public pockets, or so I thought.
As I have grown wiser and have more control over my finances and have proceeded to teach myself financial skill sets that should be taught in our education system, I wonder how much of life is to do with education and effort over financial burden.
With all the fun politics about to hit New Zealand; benefit bashing has become a fun debate. Do they get too much? Not enough? How do they live? Can you or should you raise kids on the benefits? There is no general understanding of truth to disprove, however, my take would be that most people believe living on the benefit is not pleasant and people have a reason to get off of it. My personal take is one of suspicion and I look forward to this exercise and as a proud promoter of the UBI, this allows me to see the difference.
In this post, I look to see in my own circumstances; what would I receive and what sort of life style I can live. I will not use my experience working at MSD as this would create bias. I am merely going to look at what publically available information will grant me, help me prepare, some financial savvy and some analysis will bring.
Step 1 – Planning
With any business, personal goal or activity, a good planning time set aside is vital to success.I spent 30 minutes going through my options to find items that suit my circumstances and that do not subject me to Fraud (unlike some politicians). I am a father of two with both kids below 5 and a full-time Mother caring for my children. We currently receive no help from our government but if I was to stop working (after a stand down period, which I would need to finance) I would obtain the following (assuming no health problems or ACC):
https://services.workandincome.govt.nz/cos/application.do
- Just a side note, MSD you have some bugs in your form when it auto scrolls to partners and rent input J
After reading through the documentation, I find that I can earn up to $80 a week from any form of income (aka self-employed). This planning has allowed me to think about running over to IRD for family tax credits. My example is now with me taking a net profit of no more than $80 a week for at least 30 hours of combined work. Defining hours work is too complex for Family tax credit when you are self-employed so they only complete this via your actual earnings. So a bit of planning would be required if I ACTUALLY wanted to do this (which I do not… just to be clear).
Step 2 – Obtaining Estimates
Once your planning stage is complete, the next step is to estimate or quote your job or goal. In this case, we will start to add up all our planned hypothetical benefits for my use case (aka my family)
Accommodation and Childcare
Job Seeker
MSD
Thank you MSD, you will provide me with a potential $543.84 (we will wait until next year to get the $120 I think) plus this confusing childcare assistance. I am going to ignore child care as we are both not working in this scenario and I guess anything you get goes to someone else anyway.
IRD – Working for Families
We earn $543.84 + $80 that we will go out and earn a yearly income of $32,439.68
LETS PAY TAX!
Step 3 – Live within your means
It doesn’t matter if you’re on the benefits, running a business, a home or trying to pack on muscle, you do not use more than you have otherwise there will be problems. So how does a family of four live on a net income of $655.70? Since our examples were all based on the Whanganui region which is a great place to bring up kids, I want to see if it is a great place to live on the benefit as well.
This is where a lot of you might “feel” my budget is strict or unrealistic but seeing as financial planning is what I enjoy and most of the public is in debt… I would at least consider that my calculations are realistic. I am also not going to make this extreme as I feel this is plenty to live a lifestyle that most would enjoy.
Our requirements as a family should be the following:
- Shelter: A roof over our head
- Warmth: The energy required to stay warm throughout winter
- Entertainment: We have a lot of spare time
- Transport: A single vehicle will be required
- Communication: It is the 21st Century
- Food: Gotta eat
A lot of the conservatives out there are probably already angry that a beneficiary has entertainment and communication but this isn’t 1870 and this is how they could find jobs.
Shelter $250
Whanganui at the moment is a little light on rentals altogether, but I wanted something with 2 bathrooms and centrally located and a little newer. This allows less cost for transport and less cost for heating. This isn’t the perfect choice and personally, I would probably move out of town a bit but I am trying to be “average” and $250 a week for a good quality rental is actually above the average cost.
Warmth $50
Assuming most families will have electric heaters and not a wood burner. Electric in Whanganui is costing me $120 a month in summer and $450 a month in winter and my house is larger and older than one you would choose for a benefit house.
Entertainment: $25
Ok, we need unlimited fibre broadband. This allows us to communicate with the world and find potential jobs or run a business.
Transport: $40
Maintaining a car is rego, wof, tyres etc and if you choose a 1.4l Honda Airwave like I have… you are not looking at more than $20 a week with $20 a week in fuel.
Communication: $5
Skinny mobile $16 a month. Unlimited phone calls and texts and 1.5 GB of data. DO NOT GO OVER YOUR DATA
Food: $200
Food, drink and all other groceries for a family of 4! This could be an entire blog post by itself, I have shown in previous blogs how you can feed a family on $100, so let’s add some luxuries and make it $200 a week.
So we have $570 being spent a week with a buffer of almost $100 a week.
Conclusion
Mikes Law states that a country that has no benefit to get off of the benefit is a country that is in trouble. It is clear that a good lifestyle can be had on a family on a benefit with the ability for 9 hours child care, excessive food and a nice modern home. I think we need charity and we especially need charity for children as it is NOT their fault, however, it is right that a family on the benefits can live a better life than the person working to pay for them? For instance, our family of four lives on less than $1k a week and I travel up and down the country working, have a great lifestyle and have a lot of fun activities… I would be lying if it doesn’t tempt me to buy a golf membership and retire for a year, especially since it is probable I would receive a 20% increase as the benefit is apparently not enough to survive. We need less CASH benefits, more benefits to ensure no one starves and more specifically more education about financial planning. Imagine if I had a credit card or HP on a brand new fridge instead of my $50 one?
