For many Kiwis, the midlife financial crisis hits hardest in their 40s. It’s a stage where expenses stack up, responsibilities grow, and financial stress peaks. From kids’ costs to caring for ageing parents, it can feel like everything arrives all at once.
The Midlife Squeeze
Coined by Ray Dalio as the “midlife squeeze,” the midlife financial crisis is the combination of career demands, expensive mortgages, raising children, and supporting older parents. For many in their 40s, it’s one of the most stressful financial stages of life.
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The average New Zealander in their 40s earns around $79,000 a year.
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Their KiwiSaver balance is roughly $39,000 – $50,000.
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Average household debt sits at $218,000.
Layer in childcare costs (up to $25,000 a year for daycare) and the potential burden of aged-care for parents (as much as $75,000 annually), and it’s clear why this period can feel overwhelming
Taking the Edge Off
Managing the midlife financial crisis starts with practical steps to ease the stress. One of the most powerful tools is a cashflow reality check – mapping income against expenses to identify where money is going. Without clarity here, you risk running on the financial treadmill forever.
Alongside this, an emergency fund becomes essential. Having 3-6 months of expenses saved can protect you against unexpected shocks, with nine months recommended if you have kids (think braces or health costs).
Debt strategy is another critical step. Structuring your mortgage correctly, minimising interest, and making additional repayments when possible can reduce long-term pressure. Importantly, setting clear financial goals—and aligning with your partner on those goals – provides direction and reduces conflict. After all, disagreements about money remain a leading cause of divorce
Building Wealth Under Pressure
Once the basics are in place, the next challenge is building wealth while managing the midlife financial crisis. The key is to avoid short-term risks and focus on long-term strategies.
This includes:
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Using equity to consider investment property as a long-term hold.
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Prioritising mortgage repayment before setting up new investment accounts.
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Reviewing your KiwiSaver provider and fund, as the difference could mean hundreds of thousands of dollars over time.
Career leverage also plays a vital role. Asking for promotions, networking, and upskilling can increase earning power during these high-expense years. At the same time, estate planning is crucial-yet only half of New Zealanders have a will. Protecting your family with life insurance and income protection should be non-negotiable
Key Takeaways
The midlife financial crisis peaks in your 40s, combining childcare, mortgages, and aged-care costs.
A cashflow reality check, emergency fund, and structured debt strategy are essential foundations.
Avoid chasing short-term results – focus on long-term wealth building through property, KiwiSaver, and career growth.
Estate planning, insurance, and goal-setting with your partner are critical to reduce stress and protect your future.
Next Steps:
Next Steps: Ready to take the pressure off your finances? Book a free consultation with a Lighthouse Financial adviser and get a clear plan for your cashflow, mortgage, and long-term wealth.
If you’d like to learn 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.
