We’ve had a baby, now what? Preparing your finances to go back to work

Returning to work after having a baby can be an exciting, stressful and emotional time.  

Reviewing your budget can be key to making sure you don’t get too overwhelmed. Natasha, 35, recently returned to work after having her second baby Frankie. She says reviewing her budget was key to a smooth transition. 

“The cost of living keeps rising and one income wasn't going to suffice for a small family, so I had to return to work to support my whānau,” she says.  

“I have really enjoyed the adult conversations, the mental stimulation and the opportunities and growth that comes with returning to work! But it’s important to start thinking early about finding suitable childcare and the associated costs. Try to plan for everything, even the amount you spend on coffees and eating out on office days, as it's your treat to yourself.” 

Over recent decades, the working profile of families in New Zealand has changed significantly with better access to childcare, advanced career opportunities for women, and a higher cost of living.  

Regardless of whether we choose to go back to work or not, starting a family has a massive impact on our finances. Taking time to get prepared can take a huge weight off your shoulders as you start to navigate this new stage of life.  

Here’s how to get prepared for the return to work. 

Work out the numbers 

Your income, spending and saving patterns are probably unrecognisable compared to a year ago. Creating a budget can help make them less of a mystery.  

Sorted has a budget planner you can use, or if you’d prefer grab a pen and paper or set up a spreadsheet. 

Start by calculating your household income. Think about whether your working hours have changed, if you’ve had a change in pay or if you’ll be getting any government support. 

Now think about your expenses. A big one is daycare, but will your petrol bill go up? Will you need some new work clothes? Will you be spending more on convenient food? 

Stephanie Pow founded Crayon - a platform to help parents with resources including The New Zealand Parental Leave Register, showing how different employers support the return to work. Stephanie says daycare is the biggest cost to consider at this time.  

“Childcare is the number one cost for most families when returning to work. New Zealand is the most expensive country in the world for childcare as a percentage of income (OECD),” she says.  

“A couple each earning the average wage with two children in full-time daycare, can expect to spend 37% of their income on childcare. There’s considerable variation in the type and price of childcare, and many centres have waitlists, so you want to get on this early.” 

These things will all help you to build a picture of money going in and money going out, to help you see whether you’re heading towards a surplus or a deficit. 

Check your entitlements 

You may be entitled to financial support from the government. You often have to apply for this, so do your research to make sure you don’t miss out! 

Parental leave typically lasts six months, and after that the government offers Best Start payments for new families until your baby turns one. Depending on your income, you may be able to keep getting Best Start payments until your child turns three.  

There is also extra support available depending on your situation. Check out the New Zealand Government website for more information.  

It’s also important to be aware of the impact parental leave has on your annual leave. 

Stephanie explains, “Under the legislation, when you take annual leave that you earned while on parental leave, or within 12 months of returning to work, you'll be paid based on the average amount you earned each week in the year leading up to when you take that leave.” 

“With the unpaid weeks included, the average can be substantially lower than your usual pay rate when you return, and it will slowly increase over time when you are back at work.” 

Think about how you’ll manage any extra work (paid and unpaid) 

With a new family member comes a lot of new work that you won’t be paid for.  

You’ve probably started to find your groove as a family, dividing household responsibilities in a way that works for you. But this dynamic might change again when your working situation changes.  

Have an open and honest conversation with your partner about how you’ll manage this. If you think there’s too much for you both to handle, consider whether you could get any extra help.  

This includes sharing the childcare load. Whether you’re using daycare, family or nannies, there’s likely to still be times when you’re juggling things because of illnesses or work responsibilities. 

Daycare illnesses in particular can be a big source of stress. Stephanie says some employers are now recognising this and offering extra support to help employees through. 

“A young, healthy child has eight to twelve respiratory infections a year (!), plus all the bugs they pick up from daycare, such as gastro, pink eye and hand, foot and mouth. You can quickly eat into your sick and annual leave, and catching up on work is stressful.”  

“We’re seeing more employers offer extra sick days in those first few years to accommodate this reality of raising children,” she says. 

Communicate openly with your employer 

Stephanie also emphasises the importance of having conversations with your employer to make sure you don’t miss out on opportunities just because you took time off.  

“There’s a well-documented phenomenon called The Motherhood Penalty which shows that women, in particular, take an earnings and career hit after the arrival of a child,” she says. 

“Make your desires and career development goals known, so that you and your manager can work together to identify appropriate growth opportunities.” 

It also helps to discuss expectations and logistics to keep communication lines open. 

“Most parents returning from extended parental leave don’t hit the ground running at 100% on day one. It can take a few months to get into a good rhythm with work and family commitments, not to mention that confidence often takes a hit when parents return to work,” says Stephanie.  

“Clear expectations and defined priorities that you and your manager agree on can mitigate some of those concerns. As you ramp up, these will likely change, so revisit this conversation on a regular basis.” 

Make sure your new family is protected 

When you become a parent, it is also important to make sure you have the right protections in place.  

This includes a will. Even if you had one before having a child, it will need updating based on your new situation. If you didn’t, now is a good time to get one. If both parents pass away, a will helps decide who will be the guardian of the child and how assets will be allocated. It’s an important document to have.  

It’s also a good time to review your insurances. Check what’s currently covered and if there are any gaps. Think about your new family and what that means for your insurance needs. For example, you might not have had life insurance in the past, but now may consider it a worthy purchase to ensure your child is kept financially secure. Here’s more on insurance types. 

Don’t be too hard on yourself 

Juggling the pressures of work and family life is never easy. Parental guilt is rampant, but it’s important to remind yourself that you are working hard to do the best for yourself and your family.  

Natasha says prioritising self-care has been more important than ever at this time, and that flexible working options can make a massive difference to your ability to manage the load.  

"A flexible work arrangement can help you manage your work-life balance and ensure you are giving your best, to not only work but your whānau, as well as prioritising self-care. Returning to work full time whilst managing the house and children can be demanding. Taking care of your Tinana, health and wellbeing will help the transition to work.”