Deciding to grow your family is an exciting time, hopefully you have at least 7-8 months to prepare physically, mentally and financially!
A few money topics to help you get in financial shape and think about before your new bundle arrives - while you have time and adequate sleep!
Understand your current finances
Take stock of where you are currently with your finances. What is your household income, spending, assets and debts. Now is the time to start figuring out what your money situation will be before you have a newborn to look after. What can you improve in the next few months - pay down debt, add to savings, better communication about money between yourself and your partner?
Project your revised income
Figure out what your income will be once they are here:
look into the maternity leave policy at your workplace
see if you qualify for Paid Parental Leave from the government
use up leave first from your workplace before you go on maternity leave, as it can be worth less for the first 12 months you are back at work
is there parental leave for your partner, will they be taking paid/unpaid leave
Once you have this amount, practice living on it. This is a good way to make sure your expenses are still manageable on what is usually a reduced household income. Any extra put towards paying off debt (especially high interest debt), topping up your emergency fund and additional savings to have for baby things or an extended maternity leave.
Smart shopping
Babies can come with a lot of stuff. Make a list of what baby/maternity items you’ll need.
To save money:
what can you borrow from friends with kids
can you find secondhand things from TradeMe/Marketplace/opshops
anything you want to buy new, can you wait until it's on sale eg. Black Friday or end of season sales
talk to friends with kids to see what is essential and what is a nice to have
Also factor into your budget the continual extra expenses once they have arrived eg nappies, formula, childcare.
Explore Government assistance
As well at parental leave payments from the government, there are also other payments/tax credits you can get if you meet the criteria.
Best Start - start after parental leave payments until baby turns 1, regardless of income. They will continue if you meet income criteria
Working For Families - there are different payments depending on your household income and how many children you have, this amount varies
Maintain your KiwiSaver
If you can, keep contributing 3% to KiwiSaver from your parental leave payments and Inland Revenue will also make employer contributions of 3% (new from July 2024). If not, check that your yearly contribution at least $1024 to get the government contribution of $521 in June of each year. You can make a voluntary payment if needed. This will keep your retirement fund building while you aren’t in paid work.
Childcare support
Childcare can be a big cost depending on how many days you need. Depending on your circumstances, there are a few different ways the government could help with childcare:
Childcare subsidy - if you meet the income criteria
Family Boost (new from July 2024) - eligible parents and caregivers will be able to claim up to 25% of their weekly childcare fees, or a maximum of $975 every 3-months.
20 Hours ECE funding - If a child is aged 3, 4 or 5, they are eligible for the 20 hours ECE funding scheme. The subsidy covers up to 20 hours of early childhood education each week. It can only be used for up to 6 hours a day.
Talking and thinking about these topics can help ease the financial transition that come with expanding your family. Having open money conversations and understanding what support is available can help you and your family become financially prepared so you can focus on welcoming your new arrival when the time comes.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice.
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