Building wealth on a single income can feel overwhelming, particularly after a major life event like divorce.
In the first episode of Inside a Financial Plan, James sits down with Julia to understand where she is today, the progress she's already made, and the financial roadmap that will help her build long-term security for herself and her daughter.
Building Wealth on a Single Income After Starting Over
Julia’s story begins where many financial plans don’t.
Following her divorce, she found herself rebuilding from the ground up. Alongside a student loan from studying law, she took on a significant share of the couple’s debt so her ex-husband could keep the family home, providing stability for their daughter while she focused on rebuilding her own financial future.
Despite the financial setback, Julia is proud of how far she’s come. Rather than dwelling on her balance sheet today, she’s focused on the habits, discipline and mindset that have allowed her to keep moving forward.
For James, that’s exactly where a financial plan should begin. Before discussing investments, mortgages or KiwiSaver, it’s about understanding someone’s circumstances, values and goals so the advice reflects the life they’re trying to build.
Security Is More Important Than Luxury
When James asked what money meant to her, Julia’s answer wasn’t centred around wealth or expensive purchases.
For her, financial security means having options.
She wants confidence that unexpected events won’t derail her finances, the ability to spend more time with her daughter, and enough stability that rising living costs don’t force her to sacrifice the things that matter most.
That represents a significant mindset shift.
Earlier in life, spending money brought satisfaction. Today, Julia says she gets far more enjoyment from seeing her money work towards experiences with her daughter and building a stronger financial future than she does from impulse purchases.
A Financial Plan Is About More Than Investments
One of the biggest misconceptions James addressed was that financial planning starts with choosing investments.
Instead, Lighthouse begins with understanding the person sitting across the table.
Questions about housing, lifestyle, retirement, family, career ambitions and future goals all come before discussions about KiwiSaver or investment strategies. Once those pieces are clear, the financial advice becomes much easier to tailor.
For Julia, those priorities include:
- Staying in a home that suits her and her daughter.
- Continuing to grow her career as a lawyer.
- Having the flexibility to eventually work four days a week.
- Continuing her volunteer legal work.
- Creating investments that will give her daughter a financial head start later in life.
Rather than chasing an extravagant retirement, Julia’s vision is much simpler. She enjoys working, wants to continue contributing well beyond traditional retirement age, and values having meaningful projects more than giving up work altogether.
Progress Doesn't Always Happen Overnight
One of the most powerful parts of Julia’s story is how much progress she’s already made.
A property she hoped to have fully transferred into her own name within a year ultimately took five years because of rising interest rates. Throughout that period, she continued making repayments, used her savings to keep the property, and eventually achieved the goal earlier this year.
Her KiwiSaver journey tells a similar story.
She first used KiwiSaver to purchase her first home, later withdrew funds on hardship grounds to help hold onto her property, and has only recently restarted contributions now that settlement is complete. Rather than viewing this as a setback, James explained that the focus now shifts towards rebuilding over the decades still ahead of her.
Tackling Debt One Step at a Time
Debt has been another major part of Julia’s financial journey.
After her divorce, she found herself responsible for around $40,000 of consumer debt on top of her mortgage and student loan.
Rather than trying to solve everything overnight, she focused on steadily reducing the balances while increasing her financial knowledge and building better habits. Advice from her accountant sister helped her identify opportunities to trim her spending without removing all the enjoyment from her life. Combined with additional side hustles, including pet sitting, she gradually rebuilt her financial position.
James pointed out that many people in a similar position become overwhelmed and give up altogether.
Julia’s experience shows that consistent progress, even over several years, can completely change someone’s financial outlook.
Why an Emergency Fund Came Before Paying Off More Debt
One of the first priorities James identified wasn’t paying off the mortgage faster or increasing investments – it was building an emergency fund.
At the time of recording, Julia had recently settled her mortgage and had used most of her available savings to get there. While she’d built positive monthly cash flow, she didn’t yet have a financial buffer for unexpected expenses.
James explained that having cash set aside provides flexibility. Without it, an unexpected bill often means relying on debt again, making it harder to continue building wealth.
While the long-term goal is generally three to six months’ worth of expenses, his advice was to start smaller. Even a modest emergency fund can provide confidence while allowing other financial goals to continue moving forward.
Growing Wealth Means Growing Your Income Too
Budgeting is important, but James also challenged the idea that cutting expenses is always the answer.
Looking at Julia’s budget, he noted that her spending was already relatively modest. Rather than trying to squeeze out another few dollars each week, they spent time discussing her career and future earning potential.
As a lawyer, Julia sees plenty of opportunities to continue developing her skills and increasing her income over time. She enjoys learning, wants to continue specialising, and has clear career ambitions that should naturally increase her earning potential.
James explained that for many people, increasing income can have a far greater impact than continually reducing expenses. While budgeting creates a strong foundation, higher earnings often create more opportunities to save, invest and achieve long-term financial goals.
Prioritising the Right Goals at the Right Time
One of the biggest takeaways from Julia’s financial plan was that not every financial priority needs to happen at once.
While paying off debt, rebuilding KiwiSaver, investing for her daughter and reducing her mortgage are all important, James explained that trying to tackle everything simultaneously often slows progress. Instead, the focus is on identifying what will make the biggest difference today and building momentum before moving on to the next priority.
For Julia, that means establishing an emergency fund, continuing to reduce higher-interest debt and creating a realistic roadmap that fits within a single income. Once those foundations are in place, attention can shift towards investing for her daughter and building long-term wealth.
Momentum Builds Confidence
Julia’s financial journey is proof that lasting progress doesn’t happen overnight.
After her divorce, she faced significant debt and the challenge of rebuilding on a single income. Instead of trying to fix everything at once, she focused on consistent progress, celebrating small wins and gradually improving her financial position.
James reinforced that approach throughout the session. Rather than creating an unrealistic financial plan, his focus was on building a roadmap Julia could realistically follow over the coming years. Sustainable progress creates confidence and confidence makes it much easier to stay motivated.
Key Takeaways
- Building wealth on a single income starts with understanding your goals before choosing financial products.
- Financial security often comes from creating options, not simply earning more money.
- A financial plan should reflect your lifestyle, career ambitions and family priorities.
- Building an emergency fund can be more valuable than aggressively paying down debt.
- Increasing your income over time can have a bigger impact than continually cutting expenses.
- Consistent progress and realistic goals are more sustainable than trying to change everything at once.
Next Steps:
If you’d like your own personalised financial plan, the Lighthouse Wealth team can help you create a strategy tailored to your goals, income and future.
If you’d like to watch more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
