CHANGE FOR THE BETTER
Expert advice on budgeting for baby
Love him or hate him, controversial US presidential candidate Donald Trump was bang on the money when he once declared, “If you have the money, having children is great.” Indeed, while there’s certainly no doubt that investing in the baby business delivers the most incredible, cash-can’t-buy returns, the start-up expenses can be high, not to mention the ongoing outgoings as your precious little one grows. But the good news is that you don’t have to break the bank in order to have a baby – here’s a guide to sorting your finances in preparation for parenthood and positioning your child for a prosperous future.
There’s never been a better time to boost your bank balance now that you’ve got a bun in the oven – making smart decisions in pre-conception and pregnancy can really help to minimise money worries once your baby arrives.
The final countdown
First of all, it’s completely natural to fret about finances during pregnancy. Katie Wesney, a mother of three and strategic consultant at enableme Financial Personal Trainers, recommends drawing up a budget and paying off any debt as soon as possible. “Set a tight budget, sticking to necessary expenditure. Then track your spending against your budget to keep yourself accountable,” she says. “Try paying down as much debt as possible as this will free up cash flow once your baby arrives.” Katie also advises checking that you will receive your full entitlement of maternity benefits from the government and/or your employer, and determining what happens to your Kiwisaver contributions while you are on maternity leave.
Needs vs wants
It’s easy to go overboard in the nesting process, but it pays to keep your overall nest egg in mind. Decipher what you and your baby really need and scale back spending on non-essentials.
“The truth is, a baby needs very little in the material sense,” says baby expert Belinda Smalls of All Things Baby. “All they really want and need to begin with is a safe place to sleep, nappies, appropriate clothing, food, social interaction, touch and love.” Belinda suggests jotting down the following on your ‘must haves’ list:
Safe sleeping space and warm bedding
Capsule and/or car seat
Buggy and/or baby carrier
Other items such as sterilisers, bouncers, play gyms and breast pumps are handy to have, but are either a) non-essential, or b) can wait until further down the track to see if you or your baby require them.
Spend vs splurge?
Of course, it pays to shop around when forking out for fundamentals. Sign up to email databases of both online and physical retail stores so you can be alerted of sales and hot deals, put items on layby or ask for a discount when paying cash or bulk buying. Some baby supplies stores also offer hire services for equipment such as capsules or breast pumps, or you could consider borrowing bits and pieces or purchasing second-hand. “Most newborn items you can get away with buying second-hand, as they are hardly used,” says Belinda. “For example, capsules can be expensive, therefore buying second-hand can save you a lot of money. The important thing when doing so, however, is to ensure it’s still in good working order, conforms to New Zealand safety standards and is still within its safety warranty period.” A similar approach applies when purchasing or hiring used bassinettes, Moses baskets, cots and bedding for your baby – it’s imperative that everything is from a smoke-free home, the bedding is clean and the mattress is firm.
When two become one
Slashing the household income is a daunting prospect for most couples, particularly those who have been living comfortably on two pay packets for some time. The key to managing this sudden change successfully? Preparation. Katie suggests making some lifestyle changes, including living on a reduced income in the lead-up to your baby’s birth. Saving those extra dollars in pregnancy could enable you to stay at home with your baby longer, once your 18 weeks of paid parental leave have ceased. “Setting a robust budget will go a long way in mitigating your anxiety, so you can maximise savings before baby arrives,” she says. “Some of my clients practise living on one income while they are pregnant and use the savings to extend their maternity leave.”
If there’s anything that will coax parents into giving up their morning latte, weekly manicure or that unused gym membership, this is it: the cost of raising a Kiwi kid to the age of 18 is estimated to be more than $250,000. Actually, this eye-watering figure is likely to be even higher now, given the Inland Revenue Department calculated it back in 2009. They based it on an average of $14,000 a year – the equivalent of two annual gym memberships, a weekly manicure and five lattes a day!
While spending on concert tickets, weekends away and dinner dates may dwindle for a while, expenditure on items such as nappies, baby clothes and childcare will quickly escalate, so you’ll need to construct a new budget once baby arrives to accommodate these expenses. Disposable nappies and wipes, for example, can cost around $30 a week. You may also notice your electricity bills creeping up in winter in an effort to keep your home toasty all day, and from running the bath more often. “Childcare is also likely to be one of