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Elizabeth Davies explains why she's more interested in saving for a first home deposit than going on an OE

Elizabeth Davies explains why she's more interested in saving for a first home deposit than going on an OE
<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

By Elizabeth Davies

As a young Kiwi there is some kind of social expectation that any moment I will pack my backpack, sell all my worldly assets and effectively run away for a little while. My hard earned waitressing dollars will be stuffed into an unmarked envelope under my mattress along with every penny I can scrounge.

One day when I’ve finally saved enough I’m expected to spend every last dime on a one way ticket to London where I will boldly check in to a bed bug infested hostel, finally ready to prove myself and earn adulthood through mild discomfort and homesickness.

As tempting as that sounds, I think I’ll pass.

When I tell people I have no intention of jumping on the next Contiki tour and drinking my way around Europe I’m met with shocked and suspicious looks. How dare I not partake in the Kiwi rite of passage that is the OE?
I’m either shunned for my assumed lack of interest in travel, or I’m firmly told that I’ll change my mind because you can only do these things while you’re young.

I’m far from disinterested in other countries, in fact a trip to Japan would be my dream come true right now and as for the sense of immediacy, I’m quietly confident that the historical sites of Europe aren’t going anywhere in the next few years.

I have little desire to move to London, live with six other Kiwis, work in a pub, save desperately for quick weekend trips to Berlin and spend the rest of my time huddling in a sleeping bag, texting mum with numb thumbs, begging for care packages of pineapple lumps and vogels.

Rather than spending my life savings on my OE, I intend to use them as the foundation for my first home deposit. This suggestion is often met with dismissal from those around me, insisting that at 24 I’m far too young to be concerning myself with such things. Dare I tell them that I’m too old to not at least be considering my financial future?

It’s difficult to put into words this double standard and expectation people seem to have of my generation. We are accused of wanting everything immediately, not being prepared to put in the hard savings, not understanding the true meaning of financial discipline etc. However we are also expected to gain some mysterious life skills by getting the hell out of here. We are encouraged to throw caution to the wind, to take advantage of our youth and ‘live a little’.

Your mid twenties is a difficult age. Half of you wants to lie in bed and eat raw cookie dough, watch daytime TV and revel in the revival of the scrunchie.

The other half is reminding you that cookie dough is not a nutritional adult meal, the power bill is due, your rent is likely to increase in two weeks while your wages aren’t going anywhere and in the back of your mind you’re trying to think of a suitably alternative name for your future son and/or daughter.

I guess for me it’s a matter of priorities. I can be young, fun and a little irresponsible, or old, sensible and sure, a little bit boring. I’ve made my choice and I’m happy with it, so please take back your disapproval and hold the side of pity. .My OE will wait.

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Elizabeth Davies is a 24 year-old graduate of the Auckland University of Technology post graduate journalism course. She lives with her partner in Epsom and spends her free time refurbishing vintage furniture and attempting to bake while fighting a daily battle against her bank balance. She writes a weekly article for interest.co.nz on money matters and financial struggles from a young person's perspective.

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50 Comments

I was married at 21, bought my first home at age 22, had 3 kids by the time I was 29 all on seven pounds 10 shillings a week and with not one dollar hand out from any one.

Worked three jobs plus Uni 7 days a week as did my wife

Went on first 3 months round the world OE when I was 33.

Shows what you can do if you try

You think you have it hard.

Try that some time.

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Well Big daddy, as much as it goes against every bone in my body, i agree 100% with you.

God these whinging gen y or what ever the hell they are. Expect life to be served up on an ipad. Jesus

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I'm always amazed this site doesn't advertise hearing aids and adult nappies.

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Hearing aids be good. Then could hear all these losers complaining they can't buy some dogbox in in Epsom or some other rabbit burrow in Auckland.

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Once again Big Daddy ..how much was your University Fees ...or was it Free? Did your wife work or bring up the kids? How much was your first home purchase , $1000 pounds?

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I believe fees woud be a plural. University did not improve your grammar. 

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Who said I went ?

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Weren't you claiming to be 41 a couple of weeks ago?  Liar, or Pom?

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What nonsense, you received plenty of hand outs but are simply not smart enough to perceive them.

 

But what you are saying here is that you believe you have made it off your own hard work, but your definition of having made it is to live now of the work of others. Your perception is you didn't get a hand out on your way to constructing a lifestyle where you life permanently off handouts ie: you don't produce anything and live exclusively off the backs of others efforts. Oh my what a goal to achieve, do you teach your kids and grand kids how wonderful it is to be a parasite?

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A dollar invested today is worth so much more than a dollar in the future. I started early 20s getting serious about how to spend/invest excess income. My regret is that I didn't start in my teens! Grow your snowball first, then once its big enough, spinning off enough passive income, then skim a few snow cones off the top for an OE experience

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I also shunned the OE in favour of a house deposit (and a family). Only time will tell whether I'm better off compared to my peers that went to the UK - they may or may not be financially better off, and may or may not have better work experience when they come back. 

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You are right Elizabeth - unfortunately.  Bigdaddy's generation - which is mine - had it easy.  There were jobs galore.  We could do what we liked and get what we liked and we did. Society was organised so we could.   It was a wonderful time.  But keep on doing what you are doing Elizabeth - Europe will wait.  And maybe, just maybe, we might get a government who will organise the society BigDaddy and I had once again.

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Could we hear a bit more please about how exactly society used to be organised so that everybody could do what they liked and get what they liked? 

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If I look back it was societal as well as economic.  Family was important and Government  policies reflected that.  In my case I left school when I was sixteen, worked in an office for three months then went to Wellington to train as a Dental nurse.  We were paid during our training and if we were away from our home city we had to live in the hostel which was very restrictive.   Study between 7-9, bed at 10.   Only allowed out on Friday, Saturday and Sunday but we had such fun. All young  people were trained for something and paid while in training. After graduation I  was sent all round the country  and I, like BigDaddy, had lots of other jobs, and for me it was to save for my OE. I was 20 when I did that.  Our salaries were sufficient for us to buy what we wanted and when I was 20 it was beautiful clothes made from beautiful material the like of which you don't see today.     If I remember rightly I think  salaries were linked to the cost of living. I was 20 when I bought my first, very old, car. Houses, well they were no more than three times an annual income.   Only one income was counted for  mortgage purposes. Mortgages were fixed for the term of the mortgage, there were Government grants to get into a home.  The. Government wanted people to have their own home paid for by the time they retired. There were no University fees.  I was thirty when I went to University to study law. I think I even received some money too.  In those days the people were regarded as the country's assets.

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Good god Patricia, what an absolutely boring existance it must have been for people back then.

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It was wonderful. Yes, there were disadvantages but we didn't know they were disadvantages. We just partied on!  But the parties were different.  Not a lot of booze but a lot of singing.

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YL you certainly are showing your ignorance with this response. Patricia cannot help being born in her era and was simply giving an honest account of her life experiences. No one is right  or wrong here. Why the personal attack on her?  The boomers had a great upbringing but today's children even have advantages over them with the technology available now for example. All generations have had good and bad experiences  and they all have something to offer.  

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Well Ms de Meanour. Was a time when kids use to do after school jobs, paper runs etc. To get the coin.

 

Now what.  All debt. All cards. All BS   and they think the world owes them a living.

 

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Who delivers your paper Moa Man?  Who works at the checkout at your supermarket?

Certainly wasn't a baby-boomer scanning my groceries at supermarket yesterday.

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was female ones working the tills when I went through the self-service isle an hour ago

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So people here long for a time when kids were put out to work to earn some coin instead of going to school?

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considering what many are taught..  I think there's room for both.  My young ones could really do with a clue about earning a dollar, and I could have done with a better community acceptance of that when I was young. paper & milk were about the only two on offer, and in a rural town of 3000 pop, thats only jobs for about a dozen kids whose parents had the right connections

 

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For my local countdown a few checkout operators are the school kids I see on the train in the morning.

regards

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That doesn't sound to me like people doing what they like and getting what they like.

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No. It is called working. You work,earn and then can spend or save as you like.

 

I think the point I am trying to make is too much credit out there.

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These people will be wiping your chin and changing your bed pan soon Moa Man...carefull.

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(Inappropriate comment deleted, Ed).

 

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I think this article is a bit too cut and dry. I have a nephew with an IT masters who is working in an English Bank. He is 25 and is not only getting very good work experience he is also getting a very good salary by NZ standards. He is having a great time in London and is able to enjoy plenty of trips around the UK and Europe. The company in NZ that he used to work for is keen for him to come back to work for them. He will return to NZ sooner than later but I suspect that a company like Xero will snap him up. The point I am making is that a lot of New Zealanders actually go overseas these days and enjoy both high paying jobs and the OE experience at the same time and many of them come back with a lot of dollars for the home purchase or they buy one from afar and rent it out while they are overseas.

I did not travel until I was 42 as I concentrated on working and getting ahead and now can enjoy travelling in comfort. But my experience does not make it the right one. Those who travelled to europe while young have tremendous memories to fall back on. Many of them did return and they have still got ahead despite the travel costs while young. None of us know what is ahead of us. How tragic it would be if you delayed travel to get ahead and then died young from cancer. Would it not be better to think of the wonderful travel memories you experienced when you were dying rather than the long hard days at work.

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You really are a bundle of joy gordon. 

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I think I am making a very valid point YL. If I had a dollar for every time I heard the words" take every opportunity that comes along in life as you never know what is around the corner" I would not have had to work at all." Another one is live now, not in the past or in the future. I am 58 years old. A lot of people I knew did not live to my age .  Life is surely about balance. Work hard but have some fun along the way. Part of my fun has been cars. Some will say that is silly . But it's one of my passions and it has not hurt anyone. Life without a passion or two would be pretty boring.

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Wages are higher in Europe and cost of living is much lower.  So i don't see why you need choose?  

Go on your O.E, keep saving while you are there, and come back with more savings that if you hadn't gone.

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Exactly! From a savings perspective spending some time overseas is the most responsible option. My wife and I earn significantly more overseas than we could in NZ, we can go on great holidays and still save a lot. I can't recommend it enough as an option.

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Often the experience broadens the mind.  I wish that I'd gone.  Instead I worked my butt off, put some of it into an internet startup back in 87-88, and then lost my job and income and had to fight in the employment courts, drop out from lack of finance....  I think my barrister got a lovely O.E. later....

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You got a plan Elizabeth.  Go for it.   Our best wishes to you.

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Elizabeth I note that in the introduction to you they describe you as someone who fights daily against her bank balance. New Zealand is famous for its low wages and salaries. It is not that long ago that many employers thought it was okay to pay their staff $10 an hour. Lucikily the minimal hourly rate has cured that situation. Have you thought about shifting out of Auckland where it is expensive to live (rent for example) or even to shift overseas and get some employment where you possibly will be paid more than you are currently are and you will get some OE at the same time.

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It depends on what sort of OE you do, I did a working OE based in London. I ended up working in FS in Canary Wharf and found it easier to save over there than here. Back then the exchange rate was roughly 3 GPB to 1 NZD so there was a big win went a brought those savings home. Then there’s the life and work experience you gain in a city like London, you’ll never get that living/working here.

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Life experience? Doesn't show.

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scarfie I did someting similar and gained a lot of life experience which I now happily share with my paying tenants in my houses. They get even more value for the money they pay me.

So there you go... I had a great time and kindly use that experience to benefit tenants.

I must stress that I am no different to most landlords though, who always offer better value than just a roof over a person's head.

 

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Thanks YL. Yes I am very happy with my lot.  Please convey to all of us how your travel experiences have benefited your tenants. It sounds fantastic and would be of use to all people in business. Your tenants are very lucky indeed. They must really like you and stay with you a long time. 

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So much melodrama. Life in London is only like you describe in your clichés if you are unskilled and unmotivated.

For the rest of us its an opportunity to build real careers and save much much more money than one could dream of stuck in New Zealand, while being able to travel *anywhere* in the world on a whim.

A trip to Berlin? That will cost a couple of hours of work. House deposit? The goal is to come home and buy with cash.

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I agree with you entirely. My two younger brothers who are chartered accountants both had extensive OE's in the early 1980's. Not only did they get paid handsomely but they also travelled extensively. One of them was earning 1000 sterling tax free a month in 1981 while working in London and being paid in the Channel Islands. If you don't have a decent trade or profession then you will struggle especially since the gfc. My nephew is getting work experience in London he could not get here and is being very well paid while getting it.  If you do not have a qualification that is in demand overseas then it will be hard but if you have a relevant qualification you will have a ball and get well paid while you are there.

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Liz, how about teaching english in japan? 

The JET program is great and applications should be starting soon

http://www.jetprogramme.org/e/aspiring/timeline.html

 

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Remember student loans kick in at 7.89% while overseas after a year (if apply for interest free 1st year).

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Elizabeth there is alot  of good advice in the comments.

If you want to travel dont wait too long, if you want to start a family in your early 30's and you dont travel before then, you may find its some time before your next chance.

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Elizabeth, I feel a great sense of shame that NZ does not offer you an opportunity to spread your wings.

Your worry and decision not to travel (I respect) appears to be based on the fact you and (your partner) will fall further behind in getting on the property ladder.

What a sorry state our country has become where the young and ambitious are faced with dire consequences if they decide to take a risk in life and broaden their horizons by travelling abroad.

I'm 11 years older than you, have two beautiful daughters and a lovely home. But! i would not be in this position today if it wasn't for the fact of leaving family, friends and plenty of "adult" advice and embarking on a journey over 13 years that took me to nearly every knook and crany in the world.

I occasionaly wonder how life would have been if I hadn't left these shores... 100k richer perhaps.. a bigger house, nicer car...who knows?! But one thing it taught me is that money has no value compared to  the experiences, memories and the confidence you gain from broadening your horizons.

It makes you appreciate who "you" really are and you'll often find that life takes it 'standard' course once you return and the only negative is that you often wish you were back on the beach in Aqaba, Jordan talking politics with Palestinians over sweet coffee.

Take your skills, your passion and go for it.. NZ will still be here when you get home.

 

 

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Stay home then, no problem. 

Travel is indeed overrated as the world is becoming more and more homogeneous. Most stuff comes from China, no matter where you buy it and things like local food and traditions are also heavily in retreat.

Historical monuments will still be there in 10 years time to look at. Interesting, too, that people who do not give a hoot about history, arts, culture when at home end up creating unbearable queues at the Uffizi or the Sistine Chapel :-) ... must be sudden bouts of intellectuality, or maybe simply herd instincts ...

Anyways, for my part I would be more than happy if more people followed your example. Makes good sense, gives the environment a break and unclogs the world for the not so many people who travel consciously.

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I've noticed some people see travel as an accomplishment. They return and feel as if they have achieved something. I've never understood it, to me anyone can spend money and board a plane, it's not testing anything or something to be proud of... rather similar to going to the movies or any other self gratifying experience that doesn't add anything to you or others.

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Are you serious Simon? What do you do to relax or have a break from work? Do you take vacations and if you do what do you get up to?

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Unfortunatly there is only one time in life to do your OE and no amount of money can turn back the clock. Did my OE at 21 and have still just managed to pay off my house at 47. Things have changed now and its harder than it used to be, I don't care what some people say on here, its harder end of story if you want to still try and do it all. You have to make some hard decisions along the way and leave something out.

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When you ask Your Landlord the hard questions you will notice that you do not get any answers. 

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