How to Prepare Financially for Having a Baby

This is a copy of an original article written by Soteria and shared with permission. Click here to read the original piece.

Raising a child in Aotearoa can be expensive – don’t we know it! Let’s take a look at the true cost of having a pēpi and how to save creatively as you prepare for their arrival. Plus, Victoria Harris of The Curve explains how to set yourself up for future financial success while growing your whānau.

THE COST OF A BABY

No one has a baby to make money (clearly) but do you know how much it’ll actually cost you to have a child? Here’s what the experts say:

• According to IRD research paper, Costs of Raising Children by Iris Claus, Geoff Leggett and Xin Wang, the average estimated weekly expenditure for raising a single child in New Zealand is $147-426 per week for those 12 years or under, and $196-$477 for those aged 13-18. Keeping in mind this paper was published in 2009, with inflation, could those figures could look something like $178-517 per week for a baby in 2021?
• Westpac says that “a baby typically costs a New Zealand family between $8,000 and $16,000 each year.”
• And this 2018 NZ Herald article states that raising a child from birth to 18 will set you back around $16,000 a year.

Ultimately, the figure will be different for everyone and depend on your household income and spending habits. What we do know is the more you earn, the more you’re likely to spend on your tamariki. But if you’re careful with your money and create a plan for your finances before your pēpi arrives, you’ll almost certainly be in a better position for the future.

MONEY TIPS

• Budget. Budget. Budget. There’s plenty of tools and resources out there – spreadsheets, sorted.org.nz, your bank. Assess how much you’re making, what your household income will look like when you (or your partner) go on parental leave, what you will be entitled to in terms of government financial support, and where your money is currently going. Think about where you can trim down (e.g. switching utility providers and minimising subscriptions) and consider your current debts too. Then, make a list of all the items you need to buy pre-baby, plus what you’ll be purchasing week-to-week – don’t forget to account for your māmā catch ups while on parental leave.
• Think big picture. Are you going to need to buy a bigger car? What about your house? It’s a good idea to consider these questions, especially if you want to have more than one child.
• As much as financial prep is about how much you’ll spend, think creatively about where you can save.
• Babies are in capsules for such a short time so you may want to hire instead of buy.
• Embrace buying secondhand items, like cots and prams, provided they’re safe to use (remember secondhand car seats generally aren’t recommended).
• You know that ‘list of items you’ll need to buy pre-baby’ we just talked about? If you do your research early on and decide to buy certain things brand new, chances are you’ll have enough time throughout your pregnancy to wait for a sale to roll around so you can nab a good deal. Black Friday, Boxing Day and baby shows/expos are always a winner.
• Opt for cloth nappies over disposables – according to The Cloth Nappy Company, after you’ve invested in the reusables up front, you could be looking at a saving of over $2000 over 2.5 years, or even longer if you plan on having more children.
• Cook and freeze meals in bulk. They’re cost effective to prepare and convenient to pull out for a quick and easy meal once baby has arrived. Much better than ordering takeaways, hey?
• There’s many benefits to breastfeeding and one is that it is free!
• As much as society can make us feel like we need to have it all, babies don’t actually need that much! We have a pēpi checklist that details the essentials alongside the nice-to-haves so you can make that list we keep talking about.
• Think about what happens after your parental leave finishes. Will you be a stay at home parent? Will you take a full year off work before returning? Childcare is by far one of the biggest expenses for families so it’s essential to consider all of your options.