So, one of you is a stay-at-home parent
Becoming a stay-at-home partner can be a financial minefield. I know from experience that it’s great to be present in your children’s lives when they’re young.
A part of me is envious (in the nicest possible way) of parents who stayed home full-time right throughout their offspring’s childhood. For some, however, it’s problematic — even if the family can afford to drop one wage.
Put everything on the table
Don’t go into this without some serious planning. Partners need to talk about money if one is going to give up work, short or long term. You need to be on the same page so that neither the working nor stay-athome partner feels hard done by or becomes embittered. The working partner may feel like he or she is providing everything and the other partner is not contributing. And the other one may feel that all they do for the family is not valued. Running a house, and having young children (and sometimes ageing parents) feels like a full-time job in its own right.
Don’t feel guilty
The non-working parent can often feel guilty about spending money. Or consider the money belongs to the other partner, which isn’t a healthy way to run a household. We’re not living in the 1930s anymore. All that work stay-at-home parents do running the home and managing children supports the career goals of partners, freeing them up to concentrate on bringing home the bacon. It’s an equal partnership. The stay-at-home partner shouldn’t feel guilty about spending money. Creating a budget together is a very positive way to identify and handle any potential issues. Always make sure both partners have some guilt-free personal spending money.
Consider the KiwiSaver conundrum
Too many Kiwi women are falling behind in retirement savings. Data from Te Ara Ahunga Ora, the Retirement Commission, found that women in their 40s have 30 per cent less in their KiwiSaver than men, and that rises to 32 per cent in their 50s. Part of this can be linked to women taking parenting breaks from work, or working part-time while they have children. Your planning needs to consider paying into the stay-athome partner’s KiwiSaver during that career break.
Remember, relationships don’t always last
It’s important to be financially prepared for good and bad outcomes when you choose to stay home. If you live happily ever after together then this is an academic problem. Sometimes bad stuff happens. No couple can absolutely guarantee they won’t split. I’ve seen too many women finding their relationship ends and they’re suddenly not living in the style they’re accustomed to. It can happen to men as well. Being a stay-at-home partner can severely limit your earning potential going forward. Some newly single stay-athome parents find they can only earn minimum wage and end up living in relative poverty. Keeping a career ticking over when your children are young is hard. But it can be a good insurance policy if you find yourself suddenly single. It’s more difficult to work part-time in some industries than others. I have seen stay-at-home partners who keep their knowledge and contacts up by studying online and/or being involved in industry bodies. It’s a foot in the door should you need a job suddenly. Also, make sure you’re involved in family finances. You don’t want any surprises such as “sexually transmitted debt” built up by your partner that you own half of if you split.
Don’t forget estate planning
Couples where one stays home do need to give consideration to what happens if the breadwinner dies or becomes incapacitated. Returning to work by the stay-at-home partner can be difficult in that situation. And with blended families, the partner may not inherit sufficient to live on. Insurance advisors and estate planners can help.
A final word goes to those couples who have always kept their money separate, and the non-working partner is still expected to pay half. This isn’t the way to make a relationship work. When life changes, so should your contract as a couple.