Oh the benefits of hindsight! If only we knew back then (pre-baby) what we know now (post-baby). Although that’s not possible, our corporate knowledge need not be lost. Read on, as parents in the throes of raising children share their best baby-related financial investments and decisions with those just starting out.
When babies arrive they weigh little more than a sack of potatoes, yet they have an incredible knack of tipping the balance – both your work-life balance, and your bank balance. Having a baby forces you out of your comfort zone. The blunt yet beautiful reality is that children demand your time, your full attention, and your money.
At first the demand is unspoken and minimal (once you’ve set yourselves up with the essentials - car-seat, bassinet/cot, buggy - a baby doesn’t actually cost much day-to-day) but as your little one increases in years and in vocabulary, you’ll see an exponential increase in child-related costs, and experience the additional complication of the demands (both needs and wants) coming directly from your child. If you look at the big picture it can be overwhelming. According to grownups.co.nz, “it looks like the cost of raising two children to the age of 18 is between 20 to 25 percent of a two income household. In dollar terms that’s somewhere between $13,000 and $16,000 a year for the average New Zealand household income of $64,000 a year.”
The good news is that you don’t have to come up with all of this money at once. Raising a child is like eating an elephant; you manage it one bite at a time. The other good news is that you can plan for it. BNZ have partnered with Plunket to create the BNZ Baby Budget Calculator, an interactive tool to plan your spending based on what other New Zealand parents are spending. The calculator lets parents estimate what costs are associated with the first year of a baby’s life (0-12 months) or a year of a toddler’s life (12-36 months), and contains useful information to help them along the way.
You should also be encouraged that many OHbaby! parents reported that a lot of the time it was small-scale purchases, decisions and sacrifices that made a difference in their long term financial (and personal) sense of wellbeing. Here are the purchases and decisions that reportedly paid off, time and time again.
A quality buggy. Parents agree it’s worth spending extra for a quality buggy, and well worth investing in one with the capacity to also carry B2, when he/she comes along. The Mountain Buggy Plus One for example, and Phil & Ted’s sports buggies with optional attachment seats. “It’s worth spending the extra for quality and get long term use out of it. Ours is about to do our forth child and it’s still going strong.”
Cloth nappies. Many parents applauded these as their Best Thing Ever. “My gosh they’re so much better than disposables and saved us a fortune.”
Being a stay-at-home mum was a decision many women were really pleased they’d made. Obviously it’s a choice that saves a huge amount in childcare costs, but an additional motivation/bonus is plenty of time with your little one(s) in those crucial formative years. “I’d rather live really frugally and have that time with my child. I’ll never regret that.”
Going to college while balancing being a SAHM. It’s rare thing to regret education. These days you’ll find a huge range of online courses available, which are a great option for SAHPs.
A savings account. We all agree these make perfect sense, giving young families the potential to start out on the front foot. “We saved like crazy before bubs arrived so that we could afford for me to take a year off work without being in financial hardship.” With a BNZ Rapid Save account you’ll even be rewarded for sticking to your goals! You’ll earn bonus interest by increasing your savings balance each month while making no more than one withdrawal. A Rapid Save account is also a great account to open for your newborn. One parent had this recommendation: “Start a college fund immediately upon birth and put $20 a month and all birthday, holiday and cash gifts into it. They’ll love you for it. It accumulates quickly.”
Car seats which follow your kids right through, like the Diono Radian, which won gold in the best junior/booster carseat category of the 2016 OHbaby! Awards. These save you the time and money involved in changing/upgrading as your child grows.
Health insurance. This was a reoccurring recommendation, offering obvious financial benefits as well as peace of mind. BNZ’s PrivateHealth Cover policy can be for an individual adult, a couple, or a family. It offers comprehensive surgical and major medical cover, as well as other unique benefits such as parental support accommodation costs when a child covered by the policy is having surgery, and elective sterilisation (for males and females) after three years continuous membership.
Getting a manageable mortgage in a good school zone was a strong suggestion by one parent, as was moving house to save on rent. Talk to an expert at BNZ to discuss your home loan options, apply for a home loan for a house you’ve found, or discuss/renew/move an existing loan.
New appliances. Some parents couldn’t help but rave about specific appliances and devices that had made their lives significantly easier: “In a Wellington winter - my Bosch heat pump condenser dryer. I haven’t used a clotheshorse in two years and it costs less than 80cents per load. It’s quick and gentle on clothes too. Washing and drying is no longer a chore.” Another parent recommends stockpiling not just money, but food. “We bought a freezer for the garage and an extra pack of meat every shop while I was on maternity leave.”
And a few final noteworthy suggestions (and regrets):
“Definitely a savings account and a good thermometer, like the ear or head scan one.”
“We should have bought a king bed…that is a must.”
“We sold the motorbikes and all the toys. Not much fun anymore, but we can afford the kids.”