The sudden death of her husband Michael* in 1986 at the age of 36 signalled the start of more than a decade of grinding poverty for Perth stay-at-home parent Cathy Sullivan.*
While a life insurance pay-out enabled Sullivan to discharge the mortgage on their Tuart Hill home, Michael was underinsured, meaning what he could cover with his income wasn’t matched by his insurance. So though Sullivan had the relief of knowing the house was paid off, there was nothing left over to sustain her family.
With no job and seven children aged from one to 11, Sullivan’s only sources of income were a widow’s pension and child endowment payments, a precursor to today’s family tax benefits, from the Department of Social Security.
“All up we had something like $719 a fortnight,” Sullivan says. “It might sound like a lot but try buying shoes and haircuts for eight people on that.”
Loss of the family breadwinner meant many years on a financial knife’s edge – second-hand clothes and uniforms, outings curtailed when petrol was low, scrimping to cover an annual camping holiday and a budget thrown into disarray when the family van broke down.
The stark reality
Research suggests Sullivan’s predicament was – and still is – far from uncommon.
One-in-five Australian families will be impacted by the death of a parent or a serious accident or illness that renders them incapable of work, according to The Lifewise/NATSEM Underinsurance Report.
The consequences can be devastating, at a time when people are least equipped to cope emotionally, according to ANZ Wealth group executive Alexis George.
“Events of this nature can give rise to a range of scenarios – families may need to sell their homes, adjust children’s educational arrangements, give up on family holidays; people unfortunately find themselves having to make very significant changes to the way they live their lives,” George says.
Although it’s a less-than-pleasant topic that’s easily avoided or overlooked, tying the knot or the birth of a baby can be good times to take stock and ensure both partners have sufficient cover.
“I didn’t have any life insurance myself and I used to say to Michael that if I died, there’d be no one to do the work,” Sullivan says.
“As for his policy, what was good and proper when we had one child didn’t help so much when we had seven; it cleared the mortgage but that was all.”
Learning to manage
Getting to grips with the family budget and learning to stretch her funds a dozen different ways was a challenge for Sullivan.
“I was pretty panic stricken about the finances,” she says. “I hadn’t worked for years and Michael had always managed the money. I looked after my own until I was married and then I defaulted; I left it to my husband – bad idea! He did all the bills but because we had seven children and a mortgage we didn’t have much to spare anyway.”
Then, overnight the centre of their family was gone.
“Life was totally miserable and I realised I didn’t know how to budget,” she says. “I’d just bumbled along when I was younger, got a car loan and paid that off, paid board … I managed but it was all pretty scrambly.
“All of a sudden it was ‘oh my gosh, I’ve got a house to maintain and seven children’ and I had to put measures in place to manage. They’re common knowledge now – you read stories about budgeting on the internet all the time – but I don’t think they were back then.
“So, the first time I had no money, no petrol or no food, I knew I had to work out priorities. My two top priorities were to keep us in food and the utilities switched on so I started tracking those bills and getting a rough idea when they were coming in.”
Starting to save
Despite implementing a range of frugal measures, including menu plans and a separate bill account, and receiving assistance from family and friends and board from her older children once they started part-time jobs, things remained tight for many years.
“People sometimes gave me money and said, ‘this is not for you, this is for the children’, Sullivan says. “I had to have a long hard think about accessing help and not being too proud to take it.”
Accepting a job in a friend’s insurance broking firm in 1997 after her youngest daughter started high school resulted in her being able to save for the first time since Michael’s passing.
“I can still remember looking at my bank balance when I got paid,” Sullivan says.
“I paid all the bills, shuffled things around – the money I needed to put away to pay the electricity, rates and whatnot – and there was still money in the account.”
*Names have been changed.
My financial journey is a series from ANZ Women on how Australian women have overcome major obstacles and taken charge of their finances.