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Up The Duff
How are we going to afford it? That is the ever-recurring question which seems to spring up when hopeful parents start discussing the when and how of starting a family. The answer will likely dictate which parent will take all or most of the parental leave, when or if both will return to work, and on what basis.
Like most Kiwis, the conversation ends with “we’ll make it work”. Which is true. But, hey, nothing wrong with a bit of forward planning right?
I’ve found myself in this situation this year, with our first baby due in December. So, I’ve started the financial planning (while my wife spends the money on cots, clothes and I have no idea what else). I started with making a budget – now vs. the reality when down to one income. Funnily enough, about this time last year I wrote an article about managing cash flow. I figured now was a good time to start practicing what I preach, and this is what I have learned:
- Assessing current debt level and current repayment obligations is key – then, upping repayments if you can, and aligning those repayments with your salary/wage pay intervals. The goal here is to reduce the debt, so that repayments reduce when you are down to one income. Aligning the pay intervals just makes budgeting and managing the repayments easier.
- Saving some of those hard-earned dollars now will help you to get those treats (or just buy enough nappies) later. Might be time to rethink renewing your weekly coffee cards, making your lunch, catching public transport instead of paying for parking, and not Ubering short journeys are ways I have managed this – but you will have your own negotiables and non-negotiables – just figure out what they are and where you can save. I have made use of ANZ Bonus Bonds for the simple reason that it takes four business days to cash in (avoids those spend now and regret later moments). For those of you who have more self-control, savings accounts and interest bearing deposits are great options.
- Check your entitlements to paid parental leave, Best Start Tax Credits (compliments of Jacinda – but you don’t get these at the same time as parental leave payments), and if you are eligible, working for families assistance. Fill in the relevant forms and don’t leave it to the last minute. Here are some helpful links:
- Paid parental leave: https://www.ird.govt.nz/paid-parental-leave/apply
- Best start tax credit: https://www.ird.govt.nz/working-for-families/applying/best-start
- Working for families tax credits: https://www.ird.govt.nz/working-for-families
- See your bank or finance provider if you have a mortgage (or other significant debts) – and ask if you can go on a mortgage holiday and/or do interest only payments while one parent is on leave. Most banks are open to mortgage holidays (depending on the equity in the property) or interest only payments (this is a back-up if you don’t have enough equity). We recently found out that it is important to book an appointment with a mortgage consultant to get this put this in place – so, again, don’t leave it to the last minute.
If all of this has made you want to bury your head in the sand, you’re not alone, me too. So, it’s important to keep your eye on the prize – making sure you will be able to feed and clothe that tiny human when they arrive. Don’t forget to enjoy the journey too, occasional treats and spending time with the significant other make the planning seem more manageable, and may even remind you how you got yourselves into this situation in the first place – if you know what I mean :P.
View the live conversation we had with Jone and his wife Tess
by viewing the clip on our YouTube channel here.