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Otago Daily Times
19-05-2025
- Business
- Otago Daily Times
Will giving up that coffee get you a home?
By Susan Edmunds of RNZ If you've been trying to save for a house deposit, or otherwise trying to get your financial life in order, you might have heard the advice: Give up the takeaway coffee, cut back on the avocado on toast and stop brunching. But is that really all it takes to get to your goals? RNZ has crunched the numbers and it turns out that if you give up a daily takeaway coffee, you might save enough money for a house deposit. But it could take 30 years. These numbers aren't intended to be anything but a demonstration of general principles because they aren't taking into account inflation (the price of a cup of coffee will increase over the years and inflation will reduce the buying power of your saved amount). But if you currently buy a coffee a day for $5.50 and decide to save the money instead, you could save $2007.50 a year. If you could do that every year, with a 5% return each year, you'd have $26,000 after 10 years, $69,000 after 20 years and $138,000 after 30 years. At the moment, a typical first-home deposit is about $140,000 (or roughly 25,450 coffees if you paid $5.50 each). If you were having breakfast at a café once a week and saving $20, giving that up could save $1040 a year or $70,777 after 30 years. Liz Koh, founder of Enrich Retirement, said the problem for many people trying to save a house deposit over a long period of time was that house prices increased faster than their savings. "By the time you have spent a few years accumulating the deposit, houses would have tripled in price. However, it is a still a good idea to save and it's an even better idea to cut down your outgoings so you can borrow more." She said while small savings would make a difference, most people needed to do something much more significant to be able to buy a house. If you were earning $75,000 a year at 25, with $5000 already in KiwiSaver, and put 10% of your salary into a balanced KiwiSaver, you could save $137,926 in 10 years, according to Sorted's calculator. "A better approach is to buy something small and run down and add value to it, then sell and do the same thing over again," Koh said. "Part of the problem is that first-home buyers seem to want to buy their forever home from the outset, and it's not always practical or affordable to do that. "Investing in property is a great way to make money, and a good lesson to teach is the lesson of leverage and how you can make that work for you over time to build wealth. It just requires some smart thinking about how to buy the first property." Dean Anderson, founder of Kernel Wealth, said while house prices had historically gone up faster than savings for many people, he was not as sure it would continue into the future. "The metrics supporting house prices are at their limits." He said someone who was on a lower income and in debt could pay that off more quickly by cutting down on small luxuries like a cup of coffee. If you have a loan of $20,000 on a 12% interest rate that you're paying off at $306 a fortnight, you could have 156 weeks left to run on the loan. If you topped up that payment by $20 a week, you could clear the debt 20 weeks early. "However, when past that it is about choice and trade-off of value. A daily cup of coffee to me is worth it, that's because I know I can derive greater value by focusing on my work, building a business, building my salary, which will be far more impactful than the cost of the coffee," he said. "Thinking aloud, and even based on chats we've had internally in the last week, if I was starting out today I wouldn't be worried about the coffee. I'd be doing everything I can to figure out how to protect my future and income prospects from being disrupted by AI."
RNZ News
19-05-2025
- Business
- RNZ News
How many years would you have to skip coffee to save enough to buy a house?
How many years would you actually have to skip coffee to save enough to buy a house? Photo: Unsplash If you've been trying to save for a house deposit, or otherwise trying to get your financial life in order, you might have heard the advice: Give up the takeaway coffee, cut back on the avocado on toast and stop brunching. But is that really all it takes to get to your goals? RNZ has crunched the numbers and it turns out that if you give up a daily takeaway coffee, you might save enough money for a house deposit. But it could take 30 years. These numbers aren't intended to be anything but a demonstration of general principles because they aren't taking into account inflation (the price of a cup of coffee will increase over the years and inflation will reduce the buying power of your saved amount). But if you currently buy a coffee a day for $5.50 and decide to save the money instead, you could save $2007.50 a year. If you could do that every year, with a 5 percent return each year, you'd have $26,000 after 10 years, $69,000 after 20 years and $138,000 after 30 years. At the moment, a typical first-home deposit is about $140,000 (or roughly 25,450 coffees if you paid $5.50 each). If you were having breakfast at a café once a week and saving $20, giving that up could save $1040 a year or $70,777 after 30 years. Liz Koh, founder of Enrich Retirement, said the problem for many people trying to save a house deposit over a long period of time was that house prices increased faster than their savings. "By the time you have spent a few years accumulating the deposit, houses would have tripled in price. However, it is a still a good idea to save and it's an even better idea to cut down your outgoings so you can borrow more." Enrich Retirement founder Liz Koh. Photo: Supplied She said while small savings would make a difference, most people needed to do something much more significant to be able to buy a house. If you were earning $75,000 a year at 25, with $5000 already in KiwiSaver, and put 10 percent of your salary into a balanced KiwiSaver, you could save $137,926 in 10 years, according to Sorted's calculator. "A better approach is to buy something small and run down and add value to it, then sell and do the same thing over again," Koh said. "Part of the problem is that first-home buyers seem to want to buy their forever home from the outset, and it's not always practical or affordable to do that. Investing in property is a great way to make money, and a good lesson to teach is the lesson of leverage and how you can make that work for you over time to build wealth. It just requires some smart thinking about how to buy the first property." Dean Anderson, founder of Kernel Wealth, said while house prices had historically gone up faster than savings for many people, he was not as sure it would continue into the future. "The metrics supporting house prices are at their limits." He said someone who was on a lower income and in debt could pay that off more quickly by cutting down on small luxuries like a cup of coffee. If you have a loan of $20,000 on a 12 percent interest rate that you're paying off at $306 a fortnight, you could have 156 weeks left to run on the loan. If you topped up that payment by $20 a week, you could clear the debt 20 weeks early. "However, when past that it is about choice and trade-off of value. A daily cup of coffee to me is worth it, that's because I know I can derive greater value by focusing on my work, building a business, building my salary, which will be far more impactful than the cost of the coffee," he said. "Thinking aloud, and even based on chats we've had internally in the last week, if I was starting out today I wouldn't be worried about the coffee. I'd be doing everything I can to figure out how to protect my future and income prospects from being disrupted by AI." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
NZ Herald
05-05-2025
- Business
- NZ Herald
Typical wedding costs $87,000, wedding planner says
She said photography and videography for the Matapouri wedding was $7000, the marquee was about $5000, catering was $5000 and drinks were on top of that. They also paid for family boat trips, dinners and ice skating around the event itself. 'We also had to order suits twice because we changed our mind on the colour, same with table settings… we made a few rookie errors.' Susannah Reid, director of The Wedding Planner, said she had seen the average cost of a wedding increase over recent years. She said in 2023, $58,800 was a typical budget across New Zealand. 'This was the first full year where weddings felt 'normal' again post-Covid. Couples leaned toward smaller, more intimate guest lists but didn't hold back on personal touches, styling, and experiences.' The next year, that increased to $63,600. 'With demand picking up, we saw modest price increases across key vendors. More couples began incorporating weekend-long celebrations or destination-style elements, which nudged budgets up,' Reid said. This year, the average cost was more like $87,600. 'This year marks the biggest shift yet. Rising costs in the events industry and a clear preference for quality, convenience, and personalisation mean couples are investing more than ever in their big day. We've noticed that even DIY-minded couples are prioritising professional support to reduce stress and ensure smooth execution. 'Couples are more mindful now — they're not just planning a party, they're investing in a once-in-a-lifetime experience that reflects who they are. They want the day to feel effortless and elevated, which often means bringing in more professionals to make it happen.' She said there had been a shift to celebrations over multiple days, including things such as a welcome dinner, recovery brunch or even pre-wedding cultural or traditional ceremonies. 'Most couples are now saving and planning well in advance — typically 18 to 24 months ahead of time, whereas pre-pandemic, it was common practice to plan your day within a 12-month time period. This longer lead time helps them budget more realistically and book their preferred venues and vendors without taking on debt.' She said, in some cases, families were helping with the cost. People who do not use wedding planners may be having cheaper celebrations. Late last year, some in the wedding sector told RNZ that the economic downturn was having an impact on this wedding season, with fewer bookings and people looking for cheaper options. Liz Koh, financial coach at Enrich Retirement, said it was not the cost of a wedding that was the issue, but the budget people gave themselves. 'It is possible to have a low-cost wedding. We need to bear in mind that people have different priorities and values. The key issue here is that money can only be spent once and there is an 'opportunity cost'. 'Whatever you spend on a wedding is money that you will not have for other important goals. It's really about understanding the consequences of the choices you make. If you spend $80,000 on a wedding, it may take you longer to save for a house or to be able to achieve other goals such as starting a family or travelling. 'If you have thought about this and still choose to spend $80,000 on a wedding, then it is not up to other people to judge. However, if you haven't thought about the consequences, that is a poorly made financial decision which may lead to regret.' Croasdale said the money she spent was worth it. 'We don't come home [from Brisbane] often enough, so we wanted to make the most of it and have lots of memories for our kids, and the nanas.'
