Finding out a little bundle of joy is on the way is an exciting milestone! A new arrival is likely to mean some big changes to the family finances, but the last thing you want as a new parent is for money worries to be a distraction. With a bit of planning, you can keep your finances under control and enjoy all the great things about having a baby.
For working parents, having a baby will mean time off work and less income for the family. That means it’s time to start planning for living on a reduced budget. Start by taking a good look at the household’s current income and expenses. Make a budget using our budgeting tool.
Then adjust it to see what life will be like after the baby arrives. For example, see the impact of going down to a single income.
Does the current budget allow for setting some savings aside each pay? It’s good to have some money saved up to cover all the things you'll need to care for your baby.
Got any high-interest debt like credit cards or hire purchase? Try to pay that off first – that’ll mean one less thing to worry about.
Paid Parental Leave (PPL) is a government-funded payment to eligible mothers and other primary carers, such as adoptive parents, Home for Life parents, whāngai, grandparents with full-time care and other permanent guardians. These payments go towards the loss of income when you take parental leave or stop working to care for a newborn baby, or a child under the age of six coming into your care. You may also be able to transfer all or part of your entitlement to your partner. You can claim PPL for up to 22 weeks – the Employment New Zealand website will tell you if you're eligible for paid parental leave and how much you could get.
See the KiwiSaver website to find out what happens to your KiwiSaver contributions when you go on paid parental leave.
Working for Families is government assistance aimed at helping low and middle income families cope with the costs of raising children. It offers tax credits, accommodation and childcare assistance. Find out more on the Inland Revenue website.
Best Start tax credit is a new Working for Families payment available for children due or born on or after 1 July 2018. You can get Best Start for up to three years after a new baby arrives, but you can’t get Best Start and PPL at the same time. Find out more about Best Start on the Inland Revenue website, and there is also their helpful booklet that explains PPL and Best Start.
When you're expecting, you may think you need to spend lots of money on baby gear. But before hitting the shops, it can help to talk to experienced parents about what's really needed when having a baby.
You can save a lot by buying second-hand goods online and some things, like nappies, in bulk. Better still – let friends and family know what’s on the still-to-get list. Most will welcome the opportunity to clear out their unused baby gear or offer to help out with a gift you really need.
Toy libraries and other services are aimed at making your job as a parent easier and more affordable. There’s also this baby budget calculator from BNZ and Plunket that can help you work out the costs that come along with a baby.
Childcare will be one of the biggest expenses if you (or your partner) return to work after having a baby. This is when supportive family members are worth their weight in gold! Costs and conditions vary widely among childcare centres. Shop around for one that ticks all the right boxes.
Work and Income’s childcare subsidy helps cover the cost of childcare for children under five.
In the case of a multiple birth or a domestic emergency, you may be able to get help with the cost of things like laundry, housework and cooking, as well as childcare. Find out more about financial assistance when having a baby on the Work and Income website.
You may not have seen a need for life insurance before having a baby – but now is the time to consider it. If you (or your partner) were to die, how would the family cope financially?
Already have life insurance? It’s a good idea to check the policy before the baby is born. You may need to increase it when having a baby.
Other types of insurance may also be worth considering, such as income protection for working parents. However this can be expensive, so check the budget first.
If you haven’t already, now is the time to make a will or update your existing one. It’s never nice to think about, but it is important to nominate a legal guardian for your child in the event of your death. If your personal or financial situation is more complex – for example you own your own business or are recently separated – you may need to consider other types of asset protection such as a family trust.
The Ministry of Business, Innovation & Employment website has information about your options when you return to the workforce after parental leave – including the right to request flexible working hours.
Parents Centres New Zealand also runs a return-to-work programme for parents considering re-entering the paid workforce.