Bring a child up in this world is an expensive business and that begins from even before they are born, when you first start paid parental leave (aka maternity leave).
Going down from two incomes to one (or from one to none) is not easy. The 16 weeks paid parental leave from the government certainly helps but for many people it does not come close to covering the cost of the loss of one full time wage.
Some employers such as Vodafone offer extra parental leave benefits to their staff such as topping up the Government payments to match the full wage of the employee and offering mothers that return to work within 12 months the ability to work a 30 hour week for 40 hours a week pay for six months.
Unfortunately in New Zealand this sort of extra parental leave benefits from employers is the exception rather than the rule, so for most families, if they want to enjoy the full benefit of 12 months parental leave with their bundle of joy, they’re on their own, financially speaking.
Here are some tips to help you get through parental leave without having to declare bankruptcy:
Start saving NOW
Right now! Even if you’re not expecting yet start saving. Babies are seriously expensive!
Crunch the numbers
Figure out how much you’ll actually need, don’t take the typical kiwi approach of ‘she’ll be right’ and assume you’ll just manage on one wage. For example: if you’re planning on having 12 months off work and you currently earn $2,500 a month after tax that’s $30,000 in income that you wont have. How much of that do you need to maintain a comfortable lifestyle while on leave? Minus the government payments and that’s how much you’d likely need.
Don’t think you’ll be able to save that much? Review your expenses, what expenses can you cut down on? What things might expenses might decrease when you go on leave? And what expenses will increase?
When I went on maternity leave the thing that surprised me the most was the increase in our power bill from having someone at home 7 days a week.
Second hand / hand-me-downs
First time parents – do not underestimate the sheer volume of ‘stuff’ your small human will require. My recommendation – accept all offers of second hand and hand-me-down stuff with open arms.
Parental leave not Maternity leave
Our leave here in NZ is called parental not maternity leave for a reason. It applies to either parent, not just the parent that gives birth to the child. For many couples it makes financial sense for the person who earns the most to keep working and the other person to be the primary care giver during this time, or splitting the leave up between both parents.
Being a parent of a new child is hard work and can be stressful, regardless of whether it’s your first or your fifth. Doing what you can now to prepare financially for your new child will ensure that the only thing keeping you awake at night is your new bundle of joy.
The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.
