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Running a household
Power, rates, the car, childcare and the emergency fund: the recurring costs that decide whether a budget holds.
41 situations worked through, 35 of them with the sums shown. Each one links to the guide that sets out the rules behind it, and that guide is where any rate or threshold is kept current.
The people in these situations are illustrations written to show how the rules land on somebody, not real customers and not case histories. The arithmetic is real and the rules are real; the names and the circumstances are made up to teach.
Nothing on this page matches that. Try a shorter word, or the full list of situations.
Car Finance: Dealer, Bank or Pre-Approval
Aroha - Dealer 12% vs Bank 9%
Aroha is buying a $25,000 car. She has a $5,000 deposit, so she needs to borrow $20,000 over 5 years. The dealer offers finance at 12% a year. Her bank pre-approved her at 9% a year.
- Amount borrowed: $20,000 over 60 months at 12% a year
- Monthly repayment: about $444.89
- Total repaid: $444.89 x 60 = $26,693.40
Total interest: $26,693.40 - $20,000 = $6,693.40
Tama - The Balloon Payment Trade-Off
Tama is looking at the same $20,000 loan over 5 years at 12%. The dealer offers a version with a $6,000 balloon (residual) payment at the end to lower his monthly cost. He wants to know the real trade-off.
- Monthly repayment: about $444.89
- Nothing owing at the end
Total interest: $6,693.40
The balloon cuts Tama's monthly payment by about $73, but it lifts his total interest from $6,693.40 to $8,285.20, roughly $1,592 more, and he still has to find $6,000 at the end. If the car is worth less than $6,000 by then, he is out of pocket to refinance or sell.
Mele - Add-Ons Rolled Into the Loan
Mele agrees to the $20,000 car loan at 12% over 5 years. At signing, the dealer adds $1,500 of mechanical breakdown insurance and $1,000 of GAP cover, and rolls the $2,500 into the loan. She wants to see what that really costs.
- Loan without add-ons: $20,000, about $444.89 a month, $26,693.40 total
- Loan with $2,500 of add-ons: $22,500, about $500.50 a month
- Total repaid on the bigger loan: $500.50 x 60 = $30,030.00
- Extra paid because of the add-ons: $30,030.00 - $26,693.40 = $3,336.60
Of that, $2,500 is the add-on price and $836.60 is interest on it
Because the $2,500 of add-ons sits inside the loan, Mele pays interest on it for five years. The extras raise her payment by about $55.61 a month and cost $3,336.60 in total. If she did not fully understand or want them, she can ask to cancel and be refunded, and take any mis-selling to the lender's dispute resolution scheme.
Ben - How a Bigger Deposit Cuts the Cost
Ben is buying a $25,000 car with a bank loan at 9% over 5 years. He is deciding between putting down a $2,000 deposit and using his old car as an $8,000 trade-in instead.
- Monthly repayment: about $477.45
- Total repaid: $477.45 x 60 = $28,647.00
Total interest: $5,647.00
Car Loan Balloon Payments
Dave - Standard vs 30% Balloon on a $30,000 Car
Dave is buying a $30,000 car over 5 years (60 months) at a fixed 12% a year, which is 1% a month. The dealer offers a 30% balloon, leaving $9,000 to pay at the end.
- Monthly repayment: $667.33
- Total of payments: $667.33 x 60 = $40,040
- Lump sum at the end: $0
Total interest paid: $40,040 - $30,000 = $10,040
Priya - A GFV Deal and the Negative Equity Risk
Priya takes a $35,000 car over 3 years (36 months) at 10.95% a year, with a balloon set at 43% of the price, which is $15,050.
- Standard monthly (no balloon): $1,145.03
- Balloon monthly: $790.00
Lower by $355.03 a month, but $15,050 is owed at the end
Under a guaranteed future value deal, the lender carries the risk that the car is worth less than $15,050, so Priya can walk away. Without that guarantee, the risk is hers. Read the contract to find out which one you have before you rely on handing the car back.
Sam - The Refinancing Trap
Sam took Dave's 30% balloon loan on the $30,000 car. After 5 years he has paid $33,428 in instalments but cannot afford the $9,000 balloon, so he refinances it over another 3 years at 13% a year.
- New monthly repayment: $303.25
- Total of new payments: $303.25 x 36 = $10,917
Extra interest on the balloon alone: $10,917 - $9,000 = $1,917
By refinancing the balloon, Sam turned a 5-year loan into an 8-year one and paid thousands more in interest. If he refinances again at the end, the cost climbs further. The balloon that made the monthly payment look cheap ended up as the most expensive part of the deal.
Aroha - A Smaller Car, the Same Lesson
Aroha buys a $20,000 car over 5 years (60 months) at 11.95% a year. She is offered a 35% balloon, leaving $7,000 to pay at the end.
- Monthly repayment: $444.38
- Total of payments: $444.38 x 60 = $26,663
Total interest: $26,663 - $20,000 = $6,663
Car Running Costs NZ
Aroha - A Typical Petrol Car for a Year
Aroha drives a petrol hatchback 12,000 km a year. It uses about 8 L/100km, petrol is around $2.60 a litre, and comprehensive insurance costs her about $1,000. Rego is the current petrol fee.
- Fuel: 12,000 km × 8 ÷ 100 = 960 L; × $2.60 = $2,496
- Rego (petrol, 12 months): $181
- WOF: one check a year, about $60
- Insurance (illustrative): $1,000
- Servicing and repairs (illustrative): $600
- Tyres: a $800 set every 40,000 km, so 12,000 ÷ 40,000 × $800 = $240
Running cost, excluding depreciation: $4,577 a year
Say the car loses about $2,000 of value in the year. The true all-in cost of running it becomes $4,577 + $2,000 = $6,577 a year, even though only $4,577 of that showed up as bills you paid.
Hemi - A Diesel Ute With Road User Charges
Hemi drives a diesel ute 20,000 km a year. It uses about 7 L/100km, diesel is around $2.10 a litre, and it pays RUC like all light diesels.
- RUC: 20,000 km ÷ 1,000 × $76 = $1,520
- Diesel: 20,000 km × 7 ÷ 100 = 1,400 L; × $2.10 = $2,940
- Rego (diesel, 12 months): $249
- WOF: about $60
- Insurance (illustrative): $1,200
- Servicing and repairs (illustrative): $800
- Tyres: a $1,200 set every 40,000 km, so 20,000 ÷ 40,000 × $1,200 = $600
Running cost, excluding depreciation: $7,369 a year
An electric vehicle doing the same 20,000 km pays the same $1,520 of RUC and the same higher rego, but swaps diesel for electricity. At roughly 17 kWh/100km and $0.30 per kWh charging at home, energy costs 20,000 × 17 ÷ 100 = 3,400 kWh; × $0.30 = $1,020, against the diesel's $2,940. The energy saving is what offsets the EV's RUC and dearer rego.
Cheap to Buy vs Cheap to Run, Over Five Years
Two cars, both driven 15,000 km a year for five years (75,000 km total), petrol at $2.60 a litre. Car A costs $6,000 but uses 11 L/100km. Car B costs $18,000 but uses just 5 L/100km.
- Car A fuel over 5 years
- 75,000 km × 11 ÷ 100 = 8,250 L; × $2.60 = $21,450
- Car B fuel over 5 years
- 75,000 km × 5 ÷ 100 = 3,750 L; × $2.60 = $9,750
- Fuel saving with Car B
- $21,450 − $9,750 = $11,700
- Extra you paid for Car B
$18,000 − $6,000 = $12,000, almost exactly cancelled by the $11,700 fuel saving
Aroha's Cost Per Kilometre
Using Aroha's petrol car from Example 1, we work out what each kilometre really costs, which is the fairest way to judge whether a drive is worth it.
- Running cost only
- $4,577 ÷ 12,000 km = $0.381 per km, about 38 cents
- Including depreciation
- ($4,577 + $2,000) ÷ 12,000 km = $6,577 ÷ 12,000
= $0.548 per km, about 55 cents
Because rego, insurance, WOF and depreciation land whether you drive or not, they are spread over fewer kilometres if you barely use the car, which pushes the cost per kilometre up. If your annual mileage is very low, it is worth checking whether owning a car beats car-share, taxis or public transport for your situation. Inland Revenue also publishes a kilometre rate for work-related driving, which is a handy sense-check on your own cost per kilometre.
Emergency Fund Guide
Job Loss Survival Story
Sarah, 34, lost her marketing job during company restructuring.
- Emergency fund balance: $18,000
- Monthly essential expenses: $3,200
- Coverage: 5.6 months
- Severance pay: 2 months salary ($10,000)
- Total runway: 8.7 months
Multiple Emergencies Hit at Once
The Johnson family faced a triple emergency in one month.
- Emergency fund balance: $22,000
- Monthly expenses: $4,100
- Coverage: 5.4 months
Self-Employed Income Drop
Mike is a self-employed consultant. A major client suddenly cancelled their contract.
- Normal monthly income: $8,000
- Lost client revenue: $4,000/month (50% of income)
- New income: $4,000/month
- Essential expenses: $4,500/month
- Monthly shortfall: $500
- Emergency fund: $45,000 (10 months at full expenses)
Mike's 10-month emergency fund (larger than typical 6 months) was essential for his self-employment. Income fluctuations are normal when you're self-employed. His large cushion gave him time to replace lost revenue without panic or desperate decision-making.
Building from Zero
Emma, 26, had no emergency fund and was living paycheque to paycheque.
- Emergency fund: $0
- Monthly income: $3,800
- Monthly expenses: $3,750
- Monthly surplus: $50 (barely surviving)
- Credit card debt: $2,500
Money After a Natural Disaster
Aroha - Earthquake repair within the cap (Christchurch)
An earthquake cracks the foundation and internal linings of Aroha's home. The assessed cost to repair the building is $85,000. Aroha has private house insurance with fire cover, so she has natural hazards cover automatically.
- Building cap: $300,000 plus GST = $345,000 including GST
- Repair cost: $85,000
- Is the repair under the cap? $85,000 is well under $345,000, so yes
The natural hazards layer covers the repair, less Aroha's policy excess
Even though the Commission ultimately pays this claim, Aroha never contacts the Commission. Her insurer is the single point of contact and settles the claim for her.
The Patel family - Full rebuild above the cap (Hawke's Bay)
An earthquake makes the Patels' home unsafe and it must be fully rebuilt. The rebuild is quoted at $520,000. Their private house policy is sum insured at $600,000, which is enough to cover a rebuild at today's costs.
- Total rebuild cost: $520,000
- Natural hazards layer pays up to the cap: $345,000 including GST
- Amount above the cap: $520,000 - $345,000 = $175,000
- Private insurer pays the amount above the cap: $175,000 (within the $600,000 sum insured)
Total covered: $345,000 + $175,000 = $520,000, the full rebuild
If the Patels had insured for only $300,000, the maths breaks. The Commission still pays $345,000, but a policy sum insured of $300,000 is less than the rebuild, so above the cap there is nothing left to draw on for the extra cost. They would have to fund the shortfall themselves. Setting the sum insured to the real rebuild cost is what prevents this.
Jess - A renter's contents claim (Wellington)
Jess rents a flat that floods in a storm. The building is her landlord's concern, but her own belongings, a sofa, bed, whiteware, clothes and a laptop, are ruined. The damage to her contents is assessed at $18,000. Jess holds a contents policy with a sum insured of $25,000 and a $400 excess.
- Natural hazards cover for contents: none, the Commission does not cover contents
- Jess claims on her own contents policy
- Contents damage: $18,000, within her $25,000 sum insured
- Less her excess: $18,000 - $400 = $17,600
Her contents insurer pays $17,600
If Jess had no contents insurance, she would receive nothing from the natural hazards scheme for her ruined belongings, because the Commission covers only the building and land, neither of which she owns. She could still apply for Civil Defence help toward emergency essentials, but that is nowhere near the value of replacing everything. This is exactly why renters need their own contents cover.
The Williams family - Civil Defence support after a storm
A severe storm floods the Williams family's home and a civil defence emergency is declared. They evacuate for several days, cannot work for a week, and need to replace ruined food and bedding while they are out of the house.
- Emergency accommodation: 4 nights at $160 = $640
- Replacement food and bedding: $350
- Immediate out-of-pocket so far: $640 + $350 = $990
- Plus lost wages for the week they cannot work
Work and Income assesses a Civil Defence Payment toward these costs
Notice the family runs two tracks: Civil Defence support for the immediate crisis, and an insurance claim for the longer rebuild. Treat them as separate processes so a slow insurance settlement does not leave you without cash in the first weeks.
Power, Broadband and Mobile Bills Decoded NZ
The Hohepa Family, Palmerston North
4-person household, hadn't switched providers in 8 years.
- Power switched to lower retailer: -$55/month
- Broadband switched to new 12-month fibre: -$25/month
- Mobile consolidated to family plan: -$35/month
- New monthly total: $450/month = $5,400/year
- Annual savings: $1,380
Sarah's Broadband Bill Shock
12-month fibre contract at promotional $69/month.
- Phoned retention team
- Asked "I'm going to switch - can you match the deal I signed up at?"
- Retention offered new 12-month deal at $72/month
- Saved $17/month = $204/year going forward
- 5-minute phone call
Dan's Analysis
Offered Power + Broadband bundle at "10% discount".
- Bundle: $3,900/year
- Separate: $3,360/year
- Bundle costs $540 MORE per year
- The "10% discount" is off an inflated base rate
Maya's Trip to Australia
Went to Melbourne for 5 days without checking mobile settings.
- Base plan: $45
- Roaming days: 5 × $10 = $50
- Data overages: about $280 of 140MB over
- Total bill: $375 vs normal $45
- Unexpected extra: $330 for 5 days of normal phone use
Understanding Money NZ
Harper, 10, Auckland
Opened her first savings account at age 5.
- Birthday + Christmas deposits: $50
- Harper's own deposits: about $12
- Interest earned: about $5
- Total balance: about $67
Year 9 Class, Wellington School
A week-long tracking of card-only spending.
- Students estimated they'd spend: $25/week
- Actual tracked spending: $42/week
- Invisible gap: $17/week (over $880/year)
Mason, 16, Palmerston North
Earned $1,200 over summer, locked $1,000 into a 2-year term deposit at 4.5%.
- Term deposit interest over 2 years: about $90
- On-call savings would have earned: about $60
- Extra $30 won by locking it away
Cyclone Gabrielle, Hawke's Bay, February 2023
Families with $50 to $200 cash at home managed basic needs. Those without struggled. Since then, Civil Defence recommends NZ households keep a small cash reserve as part of emergency preparedness.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Warmer Kiwi Homes Grants
Aroha - Community Services Card holder, insulation and a heat pump
Aroha owns and lives in a 1970s home in Rotorua and holds a Community Services Card. Her home has no ceiling or underfloor insulation and no fixed heater. She qualifies for the top 90% rate on both insulation and heating.
- Ceiling and underfloor insulation quote: $4,300
- Grant at 90%: $4,300 × 0.90 = $3,870
Aroha pays: $4,300 - $3,870 = $430
The Nguyen household - eligible by area, insulation only
The Nguyens own and live in an older home in a middle-income area of Hamilton. They do not hold a Community Services Card or SuperGold Combo card, but their home sits in a qualifying area on the programme map. Because it is a middle-income area, they qualify for insulation at the 50% rate but not for the heat pump grant.
- Ceiling and underfloor insulation quote: $4,300
- Grant at 50%: $4,300 × 0.50 = $2,150
The Nguyens pay: $4,300 - $2,150 = $2,150
The Nguyens still get real help with insulation, but at half the cost rather than 90%, and no heat pump grant, because their area is assessed as middle-income. Eligibility and rate depend on where the home sits on the map, not just on owning the home.
Sione - a landlord, not eligible but must meet Healthy Homes
Sione owns a rental in Porirua that he does not live in. He hoped to use a Warmer Kiwi Homes grant to upgrade it. Because it is a rental, he is not eligible for the grant at all. He still has legal duties under the Healthy Homes standards and pays for them himself.
- Grant for a rental property: not available
Sione receives $0 in grants
All private rentals have had to meet the Healthy Homes standards since 1 July 2025, with ceiling and underfloor insulation compulsory since 1 July 2019. Sione cannot use Warmer Kiwi Homes for the work, and he cannot pass the cost to his tenant. This is why the grant and the standards are two separate systems.
The Rangi household - co-payment on a larger home
The Rangis own and live in a larger 1990s home in Whangarei and hold a SuperGold Combo card, so they qualify for the 90% rate on both insulation and heating. This example works through their co-payment in full.
- Larger ceiling and underfloor job: $4,600
- Grant at 90%: $4,600 × 0.90 = $4,140
Co-payment: $4,600 - $4,140 = $460
Childcare Costs and Subsidies NZ
Tina and Mark, Hamilton
Two children, combined income $95,000. Never applied for Working for Families because they "thought they earned too much."
This one turns on the rules rather than on a calculation, so there are no sums to show.
Jason and Mei, Auckland
Hired a nanny at $25/hour cash. 40 hours/week. Didn't register as an employer.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Anna, 34, Christchurch
Considering returning to work at $65,000. One child aged 2 in daycare at $300/week.
- Net salary: ~$1,000/week
- Childcare cost after partial subsidy: $220/week
- WFF (In-Work Tax Credit gained): $72/week
- Net financial benefit of working: $1,000 - $220 + $72 = $852/week
- PLUS: KiwiSaver employer contribution ($37/week), career progression, social benefits
How Are Council Rates Calculated in NZ
Gary, 55, Rotorua
Missed 2 quarterly rates payments due to financial stress. Rates bill: $4,200/year.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Helen, 48, Wellington
Property revalued at $1,100,000 (up from $780,000). Helen believed the new CV was too high.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Mere, 72, Whangarei
Living on NZ Super ($27,000/year). Owned her home outright. Never applied for the rates rebate.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Inflation & Purchasing Power Guide
Wage Earner - Annual Pay Increases
Sarah, marketing manager in Wellington
- 2025 salary: $89,631 (28% nominal increase)
- Looks great on paper!
- But real purchasing power: $66,073 in 2015 dollars
- Actual decrease: -5.6% from 2015
- Lost ~$4,000/year in buying power despite raises
Retiree - Fixed Income Erosion
John & Helen, retired couple in Christchurch
- Combined NZ Super: $31,200/year ($2,600/month)
- Savings: $300,000 in term deposits
- Interest (4%): $12,000/year ($1,000/month)
- Total income: $43,200/year ($3,600/month)
- Expenses: $3,200/month
- Surplus: $400/month
Family - Saving for Future Purchase
Mike & Lisa, saving for house deposit in Auckland
- Target house: $800,000
- Deposit needed: $160,000 (20%)
- Current savings: $50,000
- Need to save: $110,000
- Plan: Save $2,000/month for 55 months (~4.5 years)
- Target date: Mid-2024
Saving and investing Running a business Buying a first home Debt you cannot pay Scams, faulty goods and your rights Changing or losing a job Separation, death and estates Understanding your pay and tax Owning a rental or holiday home Starting work for the first time
Every situation
Situations are taken from the guides listed above and are worked examples for education, not advice. Figures used in an example were current when the guide was written; the guide holds the maintained figure. Last reviewed 2026-09-07. See also the arithmetic on its own, every question the site answers and the guides.