15 July 2016 –

I recently received the following email from a reader, based in Perth Australia*, and I’d like to throw it out there to the personal finance community to give this lady some helpful advice.


At last someone in Australasia doing what all those great US bloggers are doing. I am addicted to many blogs incl Mr MM but I am continually dismayed by them managing to live on much smaller amounts than I can.

In NZ, 20 years ago, we lived on NZ$24,000 a year. Then 6 years ago, in Christchurch NZ$34,000 but now in Perth, the last 6 years we cannot get below AU$55,000. We don’t even have a mortgage!

We spent $50 on clothes last year (family of 4), bike everywhere, get Hungry Jacks (Burger King here in Oz) once a month, spent $115 a week on groceries and cut our own hair, so we kind of feel like we are really frugal.

But every year I do the maths and it’s a shocker. Bloody health insurance $4,000 (would never pay this in NZ but get taxed if I don’t), water rates $2,500, Council rates $2,000, and much more. I feel like the cost of living is so much higher than in the US.

I guess I live in a capital city but our budget doesn’t even include housing costs.

I agreed with your post on insurance and worked out a few years ago we were spending $9,000 a year on insurance. I have cut this down to $6,000 (at least Income Protection Insurance is tax deductible).

It’s depressing as I could see retirement as a possibility in the next 3-4 years but with this sort of annual spend, the money would never last.

I have scoured the internet over the last year to find comparable budgets of Aussie or NZ families but there is not much out there. The blogs I follow in the US seem to spend between 30 and 50 for a family of 4-5.
What are we doing wrong? What do you think is a reasonable amount to aim for? Do you have any advice?

Thanks, Perth Kiwi


On digging deeper, Perth Kiwi has given me some further information and her family’s annual expenditure.

She work fulltime in healthcare and partner is full-time home dad. They moved to Perth, from NZ for her work which she enjoys and feels that the work conditions are far better than if they moved back to NZ.

Her 7 year old at public primary school and her 3 year old spends 6 hours a week  at kindy for socialisation and learning.

Perth Kiwi’s last year’s expenditure

I apologise for the crappy image but I couldn't figure out how to get a nice clean image from Excel.
I apologise for the crappy image but I couldn’t figure out how to get a nice clean image from Excel. Please feel free to tell me how to do this.

Wow, that’s a big chunk of the family income going out each year.

In terms of retirement savings, Perth Kiwi is counting on her employer’s super contribution but nothing else at this stage. In Australia, it is required that your employer pays a minimum 9.5% of your salary into an approved scheme.

In addition, a lot of the super schemes have life and TPD insurance policies as an option that can be cheaper than going through an insurance company. Checking this out may be a worthwhile way to save a few more bucks.

As you can see, there are some expenses that should, hopefully, be a one-off which puts $21,200 back into the household budget.

Also, the professional expenses and Income Protection insurance should be tax deductible so in a round-about way, that puts another $8,950, along with any other deductibles, back in Perth Kiwi’s pocket at the end of the tax year.

That’s a total of $30,150 that, as long as those pesky, unexpected expenses don’t come along again, can be put into the investment pool.

This brings her expenditure down to $33,586 for the last year.

Besides maybe cutting back on the entertainment and house minding expenses, I can’t see that there are many other ways to reduce costs other than moving to a lower cost region. In fact, I think Perth Kiwi is doing pretty well. Especially when you compare her family’s annual expenditure with others, such as The Practical Saver, who’s frugal family of three spends US$31,000 a year living in an area he describes as ‘astronomically high’.

What do you think folks. Are there any suggestions you have for Perth Kiwi to help reduce her annual budget?


*For those of you that don’t know anything about Perth, it’s one of the most remote cities on Earth. In fact, it’s closer to Singapore than it is to Sydney (go ahead, look it up on a map). Perth and the State of Western Australia have enjoyed significant growth as a result of the mining boom occurring over the past 30 years. This and Perth’s remoteness have contributed to it having a very high cost of living compared to other parts of Australia.

15 thoughts on “Reader case study: Seeking advice for a financial dilemma”

  1. It’s hard to be critical of someone else’s budget, especially someone living in Perth when I’m sitting here in the U.S. But with that said, it doesn’t seem too out of bounds for a family of four. Besides the one off charges and the large amount professional fees it looks like you are doing really well.

    The water charge looks really high but that’s probably out of your control for the most part. If a lot of the water is going to the garden though maybe you could use a rain barrel instead?

    Thanks for sharing, Perth!

  2. Perth Kiwi could check that they are not doubling up on income protection and life insurance, which may also be automatically provided by her super fund.

    Can the unused gas connection be disconnected?

    Hopefully the various professional fees are tax deductible, which is another big chunk of cash back.

  3. Maybe have a look at alternatives for your pet and house sitting. We have met people through our local beagle club that are happy to look after our dogs for free and we return the favour. We just drop them off with food and a few toys and get regular photo updates! We dont use a house sitter when on holidays but if your worried about plants and mail you can normally find some local teenagers looking for pocket money on local buy, swap, sell pages on facebook.

    Other than that you are smashing it for the cost of living in Australia. I’d be interested in sending in my budget for 2 in a high COL area in QLD as a comparison. My categories are slightly different but relateable.

    1. Hi there Striving for FIRE and welcome to the conversation. Great ideas on the dog minding and house sitting. Putting that grand a year back in your pocket is a good move.

      Feel free to send over your budget and we can put it up as a comparison in another post. Just use the form on the contact page. And thanks for your comment.

  4. Reading through that it looks like health costs is a killer. If Perth Kiwi has health insurance for health reasons then fair enough, but if it’s for tax reasons then you don’t need health insurance as a family unless you earn more than $180,000 combined as a family. You pay the medicare levy regardless. She isn’t saving any tax and is paying $4,000 to not save any tax (Jasmin did a great post on this: https://dividendsdownunder.com/2016/04/20/private-health-insurance-rebate-tax-lifetime-health-cover-loading/ in the section ‘The tax’ – sorry for self plugging Martin (feel free to edit out the plug section in brackets if you want to)). Health insurance is such a misleading thing for most people when they don’t actually have to have it for tax reasons.

    Also, the accounting seems expensive – is she an employee doing a tax return? She COULD do it herself for free using MyTax or there are a lot cheaper accountants out there. Over $1,000 seems wildly excessive for a simple employee tax return.

    She could pay income protection through super (so it’s not effecting her normal budget). If you ever actually need it, you can make a claim through your Super fund for the money due to severe financial reasons / compassionate grounds.

    Only 3 other things stick out; that’s a LOT of stationery, could that be reduced / cheaper? The holiday appears to cost over $7,000 (camping, motor home, pet sitting). I know we all need a holiday, but it’s hard to save a lot on a modest income with that chunk being used.

    Finally, could the income be boosted? Are they getting all the Govt payments that should be (Family tax benefits etc)? Could the partner earn some money (even just doing on-line surveys – I was earning around $3,000 (on top of a full time job) from doing surveys. Is there a medical qualification that could boost her income?

    Hope that helps 🙂


  5. Thanks to everyone who has commented. Tristan I am pleased to become acquainted with your blog and thanks for your detailed thoughts.

    There in black and white you can easily see where we are haemorrhaging money. Those ‘one off expenses’ which should be one offs but we have had similar and worse amounts for different things in other years. The previous year we spent double the annual spend with kitchen renovation and a big overseas trip. I guess this year we said to ourselves we would really rein it in. I had worked out our basic expenses were about 35000 so figured discretionary spending of 15000 on holidays/gifts/entertainment/consumer goods was doable. But I was wrong. We felt like we were doing it hard but we were 15000 over.

    Getfiredasap is right, I do get some of those professional expenses back but it is still spending a dollar to save 50 percent. Of course after retirement these expenses may be a non issue. But I am still thinking about continuing to work 1 day a week and unfortunately the registration fees don’t decrease pro rata. Maintaining my ability to work would be insurance for a major catastrophe in our investments.

    I am doubling up on life insurance (through super) and in fact with the super I pay the same premium for 30% of the cover. So maybe time to ditch this. I don’t think my super fund does income insurance.

    Water is pricey in Perth (desalination primarily – it’s a very environmentally unsustainable city). About 50% of our bill is fixed supply/drainage/sewerage costs. This leave the other 50% down to us. We have heaps of fruit trees establishing and I have been generous over the dry months. So hopefully this should drop as the trees get their roots down. But you should see what we do to save water. We catch all our shower water and kitchen water for the garden. I have a jug in the kitchen sink which catches all the water we use washing hands and veges etc. We empty this on the plants about 30 times a day. I shower at work and the children only wash twice a week. BUT we have a pool (with a cover) and reticulation to keep the productive garden alive (the lawn always goes brown). The problem with water tanks in Perth is the rain all falls in winter so you need about 400000L tanks to catch it all to then use during the dry. It’s not like NZ where you can get away with 50000L tank and it refills as you use it every other week. Our water corporation commissioned a study looking at the costs of putting in even small water tanks (2000-10000L) and could not recommend the expense over the lifetime of the tank.

    Accountant: Tax in Australia seems relatively complicated. In NZ almost nothing is claimable if you are a salaried worker, so I never did tax returns. In Australia we pay so much tax I believed an accountant was essential to try and claw back some money. The fee is usually 800 but I had some personalised service last year which bumped this up. We are still exploring new ways to minimise our tax/improve our return so these fees may end up being even higher unfortunately.

    Stationary – this is actually stationary and miscellaneous (things like internet security, printing ink, kids art supplies, apps, data storage and a whole lot of ( i’m sure) unnecessary bits and pieces).

    Pet sitting – yes 1000 does look very expensive for 4 weeks holiday but this includes paying for 6 weeks for the previous financial year (so it’s actually for 2 financial years) . We pay a friend $15 a day to feed the cat, fish and stop the plants from dying when it is 40 degrees for several days in a row. We have had house sitters live here for free but have struggled to find them in recent years.

    Our main vice has always been holidays. Our frequency and duration of holidays is not that much different from 10 years ago but costs seem to have gone through the roof for us. Probably this is influenced by the children. You can’t get by with a 2 man tent or sleep in the car if the weather is bad. Well you can but it will not be a holiday. Accommodation in Australia is not cheap and 2 kids puts each nights accommodation up by $40-50 on average. Hence trying to camp more.

    Unfortunately health Insurance seems necessary for us at the moment to avoid the surcharge. But it is higher than previously for medical reasons. We have had it as cheap at 1500 but had to increase our cover in the last 12 months.

    If we elect to get rid of the gas connection they physically remove the meter box thing and any new home owner will have to pay lots for a new physical connection. So I guess it’s a house resale thing. We may review this in the future.

    So there you go that’s all the justifications/excuses.

    Income could be boosted. Makes no sense for partner to work as he earns minimum wage and childcare costs and detriment to our lives would not be offset. We don’t qualify for any rebates due to my income. Our other real problem is any thing we are saving has horrible returns. Super at least has over 6% but our other savings (interest, shares) struggle to make 3% at the moment.

    Still keen to hear any suggestions. Is anyone getting cheaper internet? mobiles? groceries?
    We will try harder on the discretionary stuff.

    Thanks again

    Perth Kiwi

  6. Hi Perth Kiwi,
    Firstly don’t be too hard on yourself. You’re doing some pretty impressive stuff and your electricity consumption and grocery budget is impressive for a family of 4.
    With your comments above, I think paid internet security is a waste of money. There are plenty of good free ones around.
    You should also review your health insurance to ensure that you’re paying for the type and level of cover you require. We found that our private health plan which was setup years ago was grandfathered and the newer plans were giving us more benefits for a cheaper price. For instance, why pay for maternity / pregnancy stuff if you’re past that stage of your life and don’t plan to have more kids.
    If you’re using prepaid and have 2 accounts with one heavy user and one stay at home then I have a solution. Telstra Prepaid Freedom plus for $30 a month covers all data / calls for the “heavy” user using “bonus” and the actual money in the account can be credited to the other “light” user as required every 14 days. The stay at home dad should have Wifi at home for majority of time and only requires periodic data. We do this for both our teenage boys and only transfer a few dollars to their phone when they actually require it.
    One last thing, it may be worth splitting your budget into discretionary and non-discretionary (eg rates, rego, internet) so you can focus and track your discretionary. Also, if you’re consciously spending on holidays etc and can fit that into your budget then stop worrying and enjoy it. On the other hand, if you’re in non deductible debt (which I don’t think you are) then you need to make a conscious decision with delayed gratification and get rid of all non essentials includings presents, gifts, dining out, entertainment, even kids sporting activities etc.


  7. Thanks a lot WTPF

    I am exploring the telstra prepaid freedom thing as per your suggestion.
    Unfortunately we upgraded our insurance recently to include more family stuff we may need. We don’t have any extras cover as I think that is a rip off. We have paid as little as 1500 per year for basic hospital only cover so currently that is non negotiable. As soon as we no longer need the extra family stuff I will revert to the bare minimum.

    Your suggestion about splitting things into discretionary and non discretionary makes sense. I think we are pretty good at saving money on the day to day things (watching our pennies) but have blow outs on holidays and home improvement (pound foolish).
    In the past we have had no spend years where we literally have spent nothing except on essential items. This has worked well for us to reach savings goals. However we spent too much time on paying off a house and not enough on getting a decent return for our other money. I really resent how housing sucks so much of your money in Australasia. Our US compatriots get so much more for their money. They can have a nice 200000 house and a share portfolio. We have 600000+ houses and are delayed getting other investments while we are paying that down. My early forays into share investing were marred by not recognising how high management fees completely gouge any long term benefit. Live and learn. Of course I could have kept debt on the house and had investments but our debt is non deductible and with high interest rates it made no sense to not pay it off in the time period affecting us.

    1. With the prepaid plans, just make sure the person that you’re doing the creditme2u is on the Simplicity Plan as that has very cheap call rates and no flagfall. Then you can just top up from the Freedom Plus account as required. It’s a good idea to setup autopay on the Freedom Plus account as it extends your cycle to 30 days and you don’t risk losing all your built up credit by missing the dateline. If you really want to save even more and have a spare phone, then buy the $30 Starter Packs and activate on Freedom Plus and transfer the credit over to the low credit user as required. You can buy the $30 Starter Packs for $10 or $15. Whirlpool Wiki has all the details.

  8. Hi Perth Kiwi,

    Thanks so much for sharing your data. My husband and I have had the same questions as you for quite a while.
    We also lived in Perth and struggle to come up with a figure that makes us feel comfortable. I am not sure whether it will make you feel a better but our expenses look very similar to yours indeed.

    Insurance. We recently changed our insurance provider and upgraded our policy due to health condition. We do have extras, so far I have already consumed twice the premium which means it has already being paid off. It is necessary in our case. I read in detailed the major health/ house&content insurance providers PDS to make sure we were getting value for money. We haven’t saved as much as a result of the changes but – at least – we are getting good coverage.

    We also have professional memberships and education expenses to keep my membership. Agree with you, it has to be included in case we need to use it post FI.

    In relation to the accountant, I think you are also doing the right thing. I am an accountant myself and do our taxes. But given the complexity in our calculations we can’t lodge online so we still have to get a tax agent to lodge the returns for us.

    Water, same issue. We have a lawn in the front yard and plants in the back yard. Summer is too hot.

    Rates, same as yours. There is no much that we can do there.

    We couldn’t see how to further minimise our expenditure, instead we have just come to conclude that it is the cost of living in sunny Perth.

    Hope this helps.

  9. Hi Ms Bona,

    Good to hear other motivated perthites have similar expenses but disappointing that we are not missing anything. Guess we just have to concentrate on the discretionary spending.

    I also think our taxes are complicated as we earn income in NZ also and have multiple income streams.

    1. Hi PerthKiwi,

      I just wanted to say thank you for all the information you have posted so far. It came just at the right time. We were grateful that you share your expense as we now feel we are in the right track. We don’t have kids but our financial situation is very similar to yours. Although, we are not close to retirement.

      Re the accountant, I think it does pay off having a good accountant and getting a good ‘tax advice’. We also have other income streams, some of which are not in Australia. And as tax is my area, I do know is better to have the right structure in place.

      Finally, I wanted to say thank you for sharing the info re what is best to grow in Perth. My husband got so excited when he read your post that we spent all Saturday night researching and watching videos on how to grow veggies and fruits so we are ready to go. We have chosen some of the veggies and fruits you mentioned are best to growth in Perth. My husband nickname is royaq in MMM :).

  10. Hi Ms Bona and Royak,

    That’s so cool that you and your husband are enthused about growing stuff in Perth. I get lots of joy out of my garden and so do the family. Some things are quick reward but others take a while so its 3 fruit the first year, 30 the next 90 the next. That’s pretty neat seeing the almost exponential growth. But then there are the hard times as well, the pests, the nutritional deficiencies, the 4 days in a row over 40 degrees. But most things you can overcome with barrier methods, judicious supplementation and shade cloth in the summer time. I like to grow things that you can’t get easily in the shops so it feels more worth it. Then you can make things for other people cheaply like special jams or dried fruit.
    Happy to answer any questions as I have learnt a lot in the last 4 years. Perth gardening is quite challenging.

  11. Perth kiwi,
    Just to agree with what’s been said. You’re doing really well. We have a family of 6 and spend about 45k per year without mortgage expenses. You’re doing better than that.

    The only areas I can see to cut down:
    -reduce health insurance cost. Shop around. We pay around 3k for our family for mid level cover.
    -reduce vacation costs, but that’s hard if air travel is needed or no family to stay with.
    -switch mobiles to vaya, $18/month for $650 calls and 1.5gb or 20/month unlimited calls and 1.5gb. . Small saving if Optus network is fine.
    -get rid of one offs if possible. Those are the killers.
    Seems like most other regular expenses are pretty reasonable to me.
    Sorry we couldn’t be of more help.

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