Agony Aunt: DPB pays but brings life to a standstill

Dear Janine,

I have recently separated from my husband and so have become a single working mother.

I have a part-time job (27.5 hours per week) earning around $500 pw and receive the in-work tax credit from the IRD of $146 pw.

I have accommodation and child care costs and after these are taken out I am left with $266.

I have just enquired about applying for a benefit and with all the "add ons" I would receive around $525 pw and wouldn't have any child care costs! This would mean after accommodation costs I would be left with $265!

So my dilemma is "should I continue working 27.5 hours per week if I am not going to be any better off financially for doing so?"

ANSWER:

I really enjoy working, have never been on any benefit and don't want to be a DPB mum but what incentives are there for me to keep working?

Would I truly be better off on a benefit? - Working Mum, Christchurch Splash yourself with cold water and take a long hard stare in the mirror.

Who is looking back at you? Do you see a successful mum who makes her own money, is showing her kids how to succeed in life and wants to push her way into higher paying jobs?

Or do you see a woman who is happy to bring her life to a grinding halt, with curtain-tugging neighbours who suspect a daytime telly habit?

Being a full-time mum would be an attractive upside, but given you work 27 hours a week, it sounds like you have quite a nice kids/work balance.

The fact that this is a dilemma for you, tells me you're ambitious - it's just eating you up that some people are obviously sitting on their chuff all day and bringing home the same amount of money as you.

The fact that you're weighing up the financials so closely, tells me you have a good brain.

A lounge lizard would have never struggled with this issue.

It would be bye-bye boss and on the Government gravy train, without a thought for Paula Bennett's budget.

I'm sure you've visualised it; no frantic fits at the kids each morning, no panics over parking.

A life filled with coffee groups, friends and freedom.

That's the rose-tinted version, but it sounds good. Here's the reality; jumping on the DPB brings life to a standstill and a road that only goes backwards. More free time and you spend more money.

No prospects for pay rises or promotions. You lose control, become a dependant on the state and accept the meager annual increases.

Your colleagues forget you and your social group changes.

The skills you've honed get rusty and dated. Self esteem might drop.

If you want to get back into the workforce, you'll undoubtedly re-enter at a lower level than you are today. Right now you're simply at a financial intersection.

The DPB and your job are equivalent at this one moment in time.

But they are not equal on any other level.

Life isn't financially fair, but rest assured, the system is not stacked in favour of the DPBers.

They're going nowhere. Keep working and you'll have a purpose and direction in life. No-one is getting a pay-rise right now, but they'll come one day.

You won't have kids in childcare forever, so those costs will soon be gone. Keep your skills fresh and your eyes peeled for opportunity.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.