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Wealth vs Well-Being: Navigating Life Choices for High-Income New Zealanders

​Our guide helps high-income Kiwis navigate the balance between career growth and life’s pleasures, offering strategies for a fulfilling, well-rounded experience.
Updated 9 April 2024
Summary
  • It can seem like there are infinite choices on where to spend your limited time, money, and effort.
  • High-income New Zealanders wanting to maximise their long-term prosperity by saving and investing are almost certainly trading off a portion of their younger years that they could be spending pursuing travel or memorable experiences.  
  • Our guide is published to outline how high-income New Zealanders effectively balance their careers with smart investment choices to maximise present enjoyment and ensure future prosperity.
  • The trade-off between building a career, investing well and growing wealth versus living for today and maximising life experiences is deeply personal. It varies hugely based on individual values, circumstances, and what life stage everyone is at. 
  • The key is to find a balance that allows for both financial security and the pursuit of meaningful, fulfilling life experiences, ensuring a holistic approach to a rich and satisfying life over time.
  • Our guide, the first of its kind, explores this issue to help share ideas and help New Zealanders consider their options and how they live.

Know This First: What is considered a high income?
  • While there's no universal definition of 'high income' in New Zealand, it heavily depends on your lifestyle (e.g., married with kids, single, living in Auckland versus Dunedin, etc).
  • As of June 2022, the average annual household income (gross) is $117,126 (per research from Stats NZ. It’s arguably that if your household earns more than this (either by a little or by a lot), you would be considered high income, given you would be earning more at a household level than the average family.

What constraints do high earners have to deal with? 
High earners have a lot in common. Not only are they likely to be in a higher tax bracket (meaning their marginal tax rates will be either 33% or 39%), but they're also likely to share these traits:
  1. Lack of time (due to longer working hours).
  2. Less freedom or more restrictions (due to working in the office or needing to be available more frequently at odd times).
  3. More stress (usually with high compensation comes more responsibility, obligation and workload).​​

Our guide covers:

Your free guide to wealth, well-being and investing, thanks to BlackBull Markets

  • Founded and operated in New Zealand, BlackBull Markets is a multi-award-winning broker that stands out for its commitment to empowering retail investors. With a platform that offers an institutional-grade trading experience, it aligns perfectly with the aspirations of ambitious high-income New Zealanders.
  • BlackBull Markets makes sophisticated trading accessible. Whether you're interested in diversifying your portfolio or looking for specific market exposure, the platform's over 300 tradeable instruments cater to your needs.
  • Understanding the unique challenges and opportunities of high-income earners, BlackBull Markets provides a seamless investment experience. This allows you to efficiently manage your investments, aligning with your strategy for balancing career growth, wealth accumulation, and life's pleasures.
  • Visit BlackBull Markets' website or read our detailed BlackBull Markets Review to better understand how their platform can integrate into your wealth and well-being strategy.
​​

What’s Considered a 'Smart Investment'?

Most New Zealanders want to make smart investments to ensure they receive a high return and continue to compound their wealth into the future. While all New Zealanders strive to make smart investments, the more income and wealth you have, the more of an impact making a 'smart investment' will have. 
  • ​For example, anyone who earns $250,000 and saves $100,000 to invest will see significantly more gains than someone who earns $70,000 a year and saves $10,000, assuming both are trying to make smart investments.
  • In other words, as your income and net worth get larger, it becomes increasingly important to know where you're investing your money, as smarter investments will yield higher overall gains and returns.

What's the trade-off New Zealanders have to make?
Your income/wealth/capital needs to work for you at any point in time. When you invest, you're putting your money to work - ideally, it would work most efficiently. For high earners, it's increasingly important to ensure that you're investing in the right way—but that it's not taking too much time to cause you too much stress (and time).

Understanding the Sliding Income / Experience Scale
  • Balancing high income with smart investments requires a multifaceted approach that includes financial literacy, understanding the best investment options and prioritising the right goals and objectives whilst continuing to track towards your financial goals in line with your values and lifestyle choices.
  • Financial planning is a very complex and dynamic process that evolves along with changes in income levels, financial markets, and personal circumstances. By adopting a holistic and informed approach, high-income earners can not only optimise their investment returns but also achieve a fulfilling and balanced life.

Know This: The importance of financial literacy is unrivalled

Unless you work in finance, the skill sets you generate from working in your high-income job may not always teach you the basics of financial literacy. Understanding the basics of personal finance and investment is foundational. All these skills are essential, whether that's understanding different investment vehicles, figuring out the implications of taxes on investments, and the importance of diversification. They will help to ensure you're making smart investments. 

We suggest you set up your foundations first:
  1. Understanding Your Financial Position: What assets and liabilities do you have, and where are all of these sitting? 
  2. Assess Your Income and Expenses: Begin by getting a clear picture of your income, expenses, and any existing debts. This will help you understand where your money is ending up at the end of each month and how much you can realistically invest.
  3. Set Financial Goals: Define short-term and long-term financial objectives. These could range from buying a home to saving for retirement to funding your kid's education.
  4. Set Aside an Emergency Fund: Before investing, ensure an emergency fund covers 6-12 months of living expenses. This provides a financial buffer against unexpected events.

Helpful guides include:
​​

​The Case for Building Your Career and Growing Wealth Through Smart Investments

​The trade-off between building your career and growing wealth versus living for today and maximising life experiences represents a fundamental tension many high earners face. This balance involves prioritising long-term financial security against the immediate gratification and fulfilment of life experiences. We outline the benefits and drawbacks building a career and focusing on growing wealth:

Compounding returns are real

  • While the 'You Only Live Once' (YOLO) mindset might incentivise young New Zealanders to spend and live it up to their youth, the same adage applies to compounding. 
  • Wealth and compounding returns are significantly amplified with time. One year's worth of savings earlier on in your career (say at 25) can be worth more than an entire decade of savings in your 40s or 50s when your costs can be high (children, housing etc) and savings low. Under this assumption, delaying some of your experiences (that are delayable) might make a lot of financial sense and can put you well ahead financially.

Once you’re off the 'career train', it can be hard to get back on

  • Career breaks come in waves. If you find yourself in a strong job or an upward trajectory in your career, it's best to keep 'riding that wave' to the end rather than exiting while on the up and trying to get back after a hiatus. 
  • Career momentum is a real phenomenon, and many New Zealanders have taken breaks at the peak of their careers (and incomes) only to realise that it's much harder to re-enter the workforce and reports of ageism are constant. While this isn't the case for everyone (taking mini-retirements or sabbaticals can be extremely valuable and the best of both worlds), it's generally much safer to continue working and moving upwards in a career than to exit prematurely.

The future is uncertain, and you likely won't have a high income forever

  • Many New Zealanders will never know how long they can sustain a high income. Whether it's unexpected cancer, chronic disease, or redundancy, many New Zealanders can lose their high-income jobs at any time.
  • As such, the certainty of high income is not guaranteed, meaning it might make sense to try to stay in the high-income role for as long as possible (even at the expense of travel and experiences). While we're not suggesting you do nothing but work, there's a time to earn cash and burn cash. The most important thing to do is figure out when this should occur so you're well prepared but not leaving it too late.

Establishing a baseline level of financial independence early creates more options

One of the strongest reasons for continuing to build your wealth and career early (sometimes overtaking travel and experience opportunities) is that once you're financially secure, you can make moves and take paths that traditionally wouldn't be available to you. The importance of this cannot be understated.
 
Financial security and stability allow you many different life paths, for example:
  • Your finances would allow you to take a year off to undertake a Working Holiday Visa.
  • If you wanted to take 2-3 years off work to have children, your finances would allow that. 
  • If you wanted to quit your job and look after your ageing parents who are at the end of their life, you could do that. 
  • Financial stability allows you the freedom to increase your standard of living (more luxury housing, better cars, better/healthier food).  

In sum, establishing financial stability early on provides a multitude of different pathways you can take (that you otherwise would not have if you chose to capitalise on life experiences first).

You need to establish a career baseline to be seen as 'credible'

While there’s no prescribed 'minimum' amount of career experience or time you need to have spent in a job, there are usually 'offramps' in careers, similar to how once you get onto the motorway, you can only get off at certain intersections.

In the career context, if you choose to get off too early, you likely won’t be credited with the minimum experience necessary to continue your upward trajectory. An example of this is education. For example: 
  • If you study accounting at university but drop out after the first year, you likely won't be able to get a job in accounting after a few years. You need to get a minimum hurdle threshold to ensure your career stability (in this case, studying for three years and passing all your papers to get your accounting degree). 
  • Sticking with the accounting analogy, if you work and complete only one year of the CA programme, you won't be classified as a Chartered Accountant - which will likely have future impacts on salary and seniority if you decide to move to another corporation in the accountant role.
  • This same logic applies to many other fields and certifications (e.g., tradie certifications, the CFA/Chartered Financial Analyst certification). 

Your free guide to wealth, well-being and investing, thanks to BlackBull Markets

  • Founded and operated in New Zealand, BlackBull Markets is a multi-award-winning broker that stands out for its commitment to empowering retail investors. With a platform that offers an institutional-grade trading experience, it aligns perfectly with the aspirations of ambitious high-income New Zealanders.
  • BlackBull Markets makes sophisticated trading accessible. Whether you're interested in diversifying your portfolio or looking for specific market exposure, the platform's over 300 tradeable instruments cater to your needs.
  • Understanding the unique challenges and opportunities of high-income earners, BlackBull Markets provides a seamless investment experience. This allows you to efficiently manage your investments, aligning with your strategy for balancing career growth, wealth accumulation, and life's pleasures.
  • Visit BlackBull Markets' website or read our detailed BlackBull Markets Review to better understand how their platform can integrate into your wealth and well-being strategy.
​​

The Case for Prioritising and Pursuing Travel and Life Experiences Over Career

If you're prepared to live for today and maximise life experiences, we outline the benefits and drawbacks of this strategy:

Delaying gratification indefinitely means you might never have these experiences

Prioritising career and wealth (especially when young) can mean sacrificing immediate pleasures and life experiences that you can’t get later, potentially leading to regret or a sense of missed opportunities. 
For example:
  • You’ll likely only be 25, single and on student exchange once in your life - and if you didn’t take that overseas experience, you may miss out on it entirely. 
  • Your health starts to decline slowly as you age - and if you didn’t take those ski trips or holidays when you were younger, you might find that you don’t have the time or energy to do them later (or the people you were going to go with aren’t available/around anymore). E.g. if you saved a cruise trip with your parents till too late, they may have already passed away.

Focusing too heavily on your career can lead to stress and burnout, which can impact your ability to take on future experiences

  • While it can make sense (and is sometimes inevitable) to intensely focus on career advancement and financial goals (like growing your net worth, hitting $100,000 invested, maxing out KiwiSaver, etc.), this kind of aggressive goal-setting can lead to stress, burnout, and neglect of personal health and relationships.
  • Building your career and growing financial stability is important, but it's not worth chopping 20 years off your life due to bad health.

Taking meaningful life experiences early can reinvigorate your energy to pursue a career

  • Prioritising life experiences can provide immediate joy, satisfaction, and a richer life filled with cherished memories. These happy emotions and memories can provide a positive feedback loop to increase your drive and desire to continue pursuing positive life experiences (which may flow into your drive to build a career and establish more financial stability).
  • ​New Zealanders often get stuck in a rut and do not know how to get out. Sampling some quality life experiences earlier on provides the necessary incentive to keep us hustling and growing rather than not experiencing any joy and happiness in our earlier lives.

Having life experiences earlier rather than later provides a broader perspective and may aid your career (through increased motivation and resilience)

  • For those who have travelled earlier in life, taking on different perspectives and seeing how the 'other half of the world' lives is invaluable. It provides more gratitude for your daily 'mundane' life and the necessary perspective to continue building (even when things get tough - as travel shows how tough things really can get in the world).
  • Additionally, experiences, especially those involving travel or learning new skills, can contribute to personal growth and a broader perspective on life.
​​

How to Strike a Balance Between Career and Experiences

Finding a middle ground of the above involves aligning immediate desires for life experiences with long-term financial goals. Suggested ways to do this include:

Set career, wealth and experience-based goals

  • There's nothing to say that you can't pursue meaningful experiences and build a meaningful career. New Zealand's work culture is far less cutthroat than that of other countries (like Australia, USA, Singapore, China, etc.). Additionally, our labour laws provide significant annual leave (minimum four weeks) and public holidays throughout the year. 
  • ​​It's completely reasonable to excel at work for 10-11 months of the year, then take an entire month off to travel to Australia, within New Zealand or Europe, spend time with the kids or go on a cruise. It's just a matter of prioritising when and how to pursue both goals. Try to develop a plan that includes career goals and experiences, allowing for enjoyment now while also securing the future.

Experiences don't need to be expensive or time-consuming

  • This is often misunderstood, and when people think of life-changing experiences, they think of spending five months abroad in Europe or spending $50,000 on a boat. However, some of the most valuable life experiences cost very little and are not flashy at all. Maybe it's camping with your kids or going on a weekend road trip with friends - there are plenty of ways to get amazing life experiences in New Zealand while spending very little time or money.

Career sabbaticals, travel breaks and mini-retirements are becoming increasingly culturally acceptable

  • Despite a weak economy, it has never been more culturally accepted to take breaks, prioritise health and wellbeing and work in career 'chunks' rather than staying at the same employer for 40 years.
  • ​​Increasingly, New Zealanders can take a year off and pursue their own personal or entrepreneurial activities without leaving a black spot on their CV/resume. Flexible career paths are becoming increasingly common (especially among millennials). Additionally, the rise of fully remote workers/digital nomads now provides a way for people to continue building their careers while getting as much life experience as they can.

Consider harnessing high income through real estate (leverage)

  • High income provides New Zealanders with something very few others can access—larger mortgages. For example, if you were on a $250,000 income (and assuming you had the typical expenses of people on $100,000), most banks would allow you to borrow much more for a mortgage, meaning you could either afford more expensive properties or increase your leverage ratio (and put less equity down).
  • While it's not always a smart idea to leverage and invest in property given the added costs and hassles, real estate can be a solid way to increase market exposure. However, if you're time-poor and high-income, investing in real estate is not the easiest as it requires due diligence, understanding of the market, and proper management.
  • ​Important: Leverage is inherently more risky and it’s important not to overleverage yourself (even if you have a high income). You can lose your job or get made redundant at any time, and many people fail to realise that before taking on significant debts. For more details, visit our guide to borrowing to invest.

Work-life balance is essential

  • The biggest challenge for high-income earners is going to be work-life balance. Many personalities that allow New Zealanders to get into high-earning careers and jobs are also the type of personalities that struggle to switch off after hours or truly take extended vacations.
  • Many of these 'workaholics' continue to work far beyond what they need to, whether out of autopilot or because that's all they know how to do. Ensuring a healthy balance between work and personal life is crucial for long-term happiness and success - and if there's one piece of advice to high-income earners, it's to 'ease off the gas' when it comes to work.

Watch for early signs of burnout

  • ​Generally, the higher the income, the more hours you'll work. For example, it's much more likely that a person on $250,000 a year is working 50-60 hours a week rather than 20 hours a week. The more hours somone works, the more likely they'll suffer from burnout (neglecting health, not taking enough time to sleep or rest, or ignoring what your body is telling you).
  • The earlier you can identify and catch burnout and correct course (take a short vacation, work fewer hours, outsource or offload some of the work to another colleague), the more sustainable and longer you'll be able to continue working (and earning a high income).

Watch for lifestyle inflation

  • It's all too easy to acclimatise to a new income level. As you earn more money and see more cash in their bank accounts, getting a nicer car, eating out at nicer restaurants and buying new gadgets becomes all too easy.
  • While a little lifestyle inflation is probably warranted, it’s essential to ask whether that additional increased spending is truly generating more happiness above and beyond the status quo. The most valuable thing high earners can do is to invest all additional income above and beyond the expected baseline levels.

Don’t fret over the little things

  • As people work more hours and get more exhausted, it's too easy to have bad reactions to the smallest things (such as an untidy house, a traffic jam or a slow wi-fi connection). Just know that many things that annoy you will ultimately have a minimal impact on your future career and where you'll end up financially.
  • Letting go of small things and taking a wider perspective on where you are and where you're going in life can be a great mental tool to take control of your emotions.

Don't fall into the high-income debt trap

  • It can be easy to assume that because you have so much disposable income, the interest you’re paying on your debt doesn’t matter. However, just like wealth compounds and snowballs, so too does debt. If you’re not careful, those small credit card balances (growing at 20%+ a year) can snowball into serious liabilities over time.
  • ​If you have high-interest debt, such as credit card debt, try your absolute hardest to pay it off. New Zealanders on high incomes are likely to be able to pay off these debts relatively quickly (given the amount of disposable income they can generate), meaning the interest generated on these debts is kept to a minimum.

​Balance a high savings rate with must-have experiences

  • When it comes to saving for your future or living in the moment, it's not an 'either or'. You can gain valuable life experiences while continuing to build your career at the same time. A good rule of thumb is to delay the experiences you can take later but take the once-in-a-lifetime experiences (given that you might not be able to do them in the future).
  • ​Often, getting a high (but not perfect) savings rate will get you close enough to your goal. For example, if you're able to save 40% of your after-tax income, whether or not you save 10% more (50% of your after-tax income will not drastically improve your future financial situation (e.g., it won't allow you to retire 20 years earlier), getting to a 'good enough' savings rate and continuing to invest that all is 90% of the task done.
​​

Your free guide to wealth, well-being and investing, thanks to BlackBull Markets

  • Founded and operated in New Zealand, BlackBull Markets is a multi-award-winning broker that stands out for its commitment to empowering retail investors. With a platform that offers an institutional-grade trading experience, it aligns perfectly with the aspirations of ambitious high-income New Zealanders.
  • BlackBull Markets makes sophisticated trading accessible. Whether you're interested in diversifying your portfolio or looking for specific market exposure, the platform's over 300 tradeable instruments cater to your needs.
  • Understanding the unique challenges and opportunities of high-income earners, BlackBull Markets provides a seamless investment experience. This allows you to efficiently manage your investments, aligning with your strategy for balancing career growth, wealth accumulation, and life's pleasures.
  • Visit BlackBull Markets' website or read our detailed BlackBull Markets Review to better understand how their platform can integrate into your wealth and well-being strategy.

Frequently Asked Questions

Our list of FAQs below is general in nature - we encourage everyone to be open about this topic and talk honestly with their partner and family to help make decisions that make sense.

How much of my high income should I save and invest?

A common recommendation is to save at least 20% of your income, but this can vary depending on your financial goals, age, and lifestyle. High-income earners may aim to save and invest 30 to 40% or more of their income, especially if they are trying to achieve financial independence or early retirement.

Should I pay off debt or invest my extra income?

This depends on the interest rate of your debt compared to the expected return on your investments. If your debt has a high-interest rate (e.g., credit card debt), it's often wise to pay it off first. If the interest rate is low (e.g., a mortgage), investing might be more beneficial, especially if you expect a higher return from your investments. 
Also, often, there are penalties for paying off a mortgage early (known as early repayment penalties), so it may not be possible for you to pay off mortgage debt early without incurring costs.

How often should I review my investment portfolio?

It's wise to review your investment portfolio at least annually or after significant life events (e.g., marriage, birth of a child, career change). Regular reviews help ensure your investments align with your current financial goals and market conditions.

What should I do if my investments are underperforming?

Evaluate whether the underperformance is due to short-term market fluctuations or fundamental issues with the investment. Consider the long-term outlook and whether it fits your overall investment strategy. Consulting with a financial advisor can provide insights and help you make informed decisions.

How can I balance enjoying life now with saving for the future?

Create a budget that includes savings, investments, and discretionary spending allocations. This can help you enjoy your current lifestyle while securing your financial future. Prioritise spending on experiences and items that bring you happiness and fulfilment.

How important is it for high-income earners to have a diversified investment portfolio?

Diversification is crucial for managing risk, especially for high-income earners with more to lose. A well-diversified portfolio can help protect against market volatility and reduce the risk of significant losses.