One of life’s great experiences is having a baby. The birth or adoption of a first child in particular is a life-changing event and brings with it a mixture of different emotions. Worries about money can offset the happiness a baby brings, so the loss of income and additional expenses need to be carefully planned.
Paid parental leave of up to 14 weeks is available providing certain criteria are met, as well as unpaid leave of up to 52 weeks, and special leave is available for such things as antenatal checks. Confirming your entitlement to paid and/or unpaid leave is the first important step towards planning your finances. Check with your employer and also the Department of Labour (www.dol.govt.nz). You may also be eligible for Working for Families Tax Credits so check your entitlement with Inland Revenue (www.ird.govt.nz).
Once you have established what your new income will be, it is important to prepare a budget. If your expenses are more than your income while one partner is not working, you will need savings to help you get by. You might also need to save a lump sum to buy furniture and clothes for your baby. If you have no savings you will need to cut back on your costs to avoid going into debt. A mortgage is often your biggest cost and you can talk to your bank about how to make your payments lower while you are on one income.
When you have worked out your new living costs, the best thing you can do while you are waiting for baby to arrive is to start living on your new budget as soon as possible. That way, you will have a few months to add to your savings, adjust to your new budget and refine it to make it work.
Liz Koh is a financial adviser. Her disclosure statement can be obtained free of charge by calling 0800 273 847. Author of Your Money Personality; Unlock the Secret to a Rich and Happy Life, Awa Press, March, 2008. For free eBooks, go to www.moneymax.co.nz and www.moneymaxcoach.com
