Starting a family? How to future-proof your finances - Blog - BetterSaver
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Starting a family? How to future-proof your finances

May 9, 2022

There are so many decisions to make when starting a family. You have to set up the baby’s room, work out childcare arrangements, and pick a name - just to name a few things to get ready for your new arrival.

If you’re like most parents, you probably spend a significant amount of time thinking about how to provide for your growing family. It’s tough not to when, every time you turn around, there seems to be another expense. So take a deep breath - and then take action.

According to one estimate, raising a child from birth to age 18 in New Zealand will cost you about $285,000—that’s about $16,000 a year, or $304 per week.

Every decision you make today could directly impact your family’s future. So it pays to pay attention and plan ahead!

Here are five things you can do now to future-proof your family's finances:

First, the obvious: make changes to your budget to accommodate your growing family.

Kids cost money. Your previous budget that allowed for evenings out or a bit of retail therapy isn’t going to work anymore (not that you are likely to have the energy for it anyway).

There are obvious expenses like nappies, clothing, a car seat, a baby carrier, stroller. Your new budget will have to factor in additional costs like doctor’s visits and childcare.

Start by making a list of what you need. Stick with needs, not wants - tune out the marketing directed at new parents to buy non-essentials. Watch for sales and see what you can get second hand. If you’re planning on having more kids, hang on to what you can use for the next child.

You should also use this time to see where you can trim your pre-kids budget. Shop around to get the best deals on expenses like your power bill or mobile phone plan. You will be spending more time at home with the baby (and washing lots of nappies and clothes), so bear in mind your power bill might increase.

Build a bigger safety net.

You have accounted for your new expenses in your budget, but what about surprise expenses? If your car breaks down or the heat pump blows, you need to be able to afford repairs. Expect the unexpected.

Time to pad your emergency fund with extra savings.

Experts recommend having 3-6 months of living expenses saved up. If you’re unsure what that looks like, pull out your last few bank statements and add them up. There’s also a calculator that can give you a decent estimate here.

Keep in mind you need to be able to access your emergency fund easily. You may not have days or weeks up your sleeve to get your funds out. It isn’t money to be put into investments where you can’t withdraw immediately. Keep it in a savings account or possibly term deposits.

And don’t expect to rely on credit cards as your safety net. This is not the time to accumulate more debt that will take years and years to pay off. Watch out for other debt traps that might seem like a good short-term fix.

Check your wills and life insurance.

You’re not done with expenses yet. No one likes to talk about the possibility of yourself or your partner dying, but it would be even worse to leave each other unprepared if the unfathomable did happen. Planning ahead will save a lot of stress and protect each other - and your little ones.

If you haven’t made a will, now is the time. Beyond designating who gets your assets when you pass, your will can specify who looks after your children and what your wishes are for your funeral. If you don’t have a will, the government will divide your assets. And if you made a will before getting married, it is no longer valid.

DIY wills can be challenged, so it is safest to get legal advice. Some lawyers write wills for free. Online platforms like Public Trust make the process easy and are upfront with pricing.

Life insurance will help your family with finances, like funeral expenses or mortgage payments. Some pay out if you are diagnosed with a terminal illness. You can opt for additional policies like income protection. Life insurance can be hard to understand, so it’s best to seek expert advice to ensure you have adequate coverage. Find a financial adviser who specialises in insurance to guide you.

Invest to protect your family’s financial future.

Investing takes advantage of compound interest, so the earlier you start, the better. Even starting with a small amount now could mean tens or even hundreds of thousands of dollars more in savings by the time your child is ready to move out on their own. And remember, you still have to look after your own retirement savings.

The easiest way to start investing is to sort your KiwiSaver fund. Your contributions are withdrawn from your paycheck automatically. Your KiwiSaver fund is then invested on behalf. Plus, the government and your employer contribute to your fund.

The fund you choose directly impacts how much you can potentially save, so it is critical to enrol in the right fund for you. BetterSaver makes it easy with our Fund finder quiz. We consider your goals, timeframe, and ethics to ensure you find the ideal match for you.

Many online platforms make it easy to invest with little money needed to start. Check out our tips for what you need to know when you start investing.

See if you qualify for government assistance.

The government provides various forms of assistance. Check these links to learn more:

KidsHealth is a reliable resource of information for NZ parents. Check out their Financial Help page for video resources and more.

We want to help you be a better saver.

As with most financial matters, it’s best to seek help from an expert. A financial adviser will examine your finances and give you specific professional advice to improve your financial situation. They will work with you to create a financial plan that maps out what you need to do now and in the future to look after your family and meet your long-term financial goals.

The BetterSaver team is here to help. Our vision is to transform Kiwi futures by providing accessible KiwiSaver advice.

No one makes it easier than us to get your KiwiSaver fund right. Ready to get started? Take the Fund finder quiz and switch your fund in less than five minutes.