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Financially Preparing for a Baby

Having a baby is such an exciting life milestone. It can encompass, challenge and grow you as a person, it gives you a completely new set of responsibilities, reshifts your perspective and we don’t need to mention how rewarding it can be, even at the worst of times. 

While a new arrival is a big change for yourself, your partner, and your family; it also means some big changes for your finances. The average cost of raising a child in New Zealand is around $16,000 per year. As many new parents reduce down to one income once the baby is born, it’s good to have a financial plan in place to ensure there are no nasty shocks or pressures once your bundle of joy arrives.


MONTH 1 – Begin to track your spending  

Begin to create a picture of your monthly spending. Include daily expenses, debt repayments, subscription fees etc. so you can begin to see your spending patterns and unnecessary expenses that you can cut back on. You will also find expenses that may be obsolete once the baby arrives such as transportation costs to and from work.


MONTH 2 – Cut down on debts 

Having your income streams reduced down to one can be hard for some couples. It can be even harder if you have a lot of monthly repayments to make on higher purchase products. Avoid any new debt, try to reduce your debts as much as possible, and look into consolidation to save on interest payments. Every bit counts.



MONTH 3 – Know what you’re entitled to

Government websites such as MBIE and IRD have some great resources regarding paid parental leave and other government allowances you may be eligible for. Depending on your current working arrangement, you could be entitled to take up to 52 weeks of parental leave (26 weeks primary carer leave and a further 26 weeks’ extended leave and up to 26 weeks parental leave payments while you are not working so you can care for your child. (Employment New Zealand)

MONTH 4 – Practice living off one income and draw up a new budget 

After you’ve tracked your spending for a couple of months, draw up a new budget and try to stick to it for at least a month to see what it’s like to live on one income. If it’s too barebones or too lavish, you can adjust your budget accordingly. Remember to budget for baby expenses!

MONTH 5 – Get together a list of what you need 

It can be super exciting going shopping for a new baby, but you need to draw a clear line in the sand regarding the things you actually need and the things you want. Talk to other parents about what they found they really needed or could do with to make life that little bit easier in the first few years of parenting.

MONTH 6 – Look into childcare

Although this may be a few years away yet, the earlier you look into daycare/childcare options the better as you’ll have a much wider range to choose what’s best for yourself and bubs. Waiting lists can be extensive, particularly if it is a good facility or reasonably priced.

MONTH 7 – Buy life insurance

Now that life is bigger than just yourself, you need to think – if I or my partner were to die, how would the family cope financially? If you talk to an adviser, they can give you various options that relate best to you and your family’s circumstances.

MONTH 8 – Write a will

Never nice to think about but if you haven’t already, now is the time to make or update your will. It’s important to nominate a legal guardian for your child in the event of your death.

We know that preparing for a child is a very personal experience and this information may need to be adjusted to your own situation. We hope this has helped in some way to financially prepare for your baby.