Feeling broody? Then now’s the time to start considering the dollars and cents of adding to the family.
In an ideal world, the only currency you'd need to increase the size of your family would be love. But the reality is, the financial costs of raising a child can affect the emotional gains. However, with research and some forward financial planning, you'll be more able to manage when the time comes. BNZ have a helpful baby budget calculator that can help you work out what your baby’s expenses will be.
Make a budget
Write down everything you spend over a week, from the big ticket items to the small ones. Note the areas where you could save money. Creating a budget is the first step to discovering what scenario will work best for you. Work out an average weekly/monthly spend, so you can avoid going over it. If you're planning on returning to work, are you intending to go back full-time or part-time? You'll also need to consider if it's actually worth your while returning to work at all, given the added expense of another child.
Set up a savings account
The next thing to do is start saving – now! If you've gone back to work since having your child/children, take advantage of your income while you have it, and put as much money aside as you can from each pay cheque.
BNZ’s Rapid Save is a great place to start, there is no monthly base fee and your base interest is calculated daily. You can also earn bonus interest * if you increase your balance month on month (excluding interest earned during the period), and you make no more than one withdrawal.
Pay off your debts
Then get stuck into repaying debt. Pay off any credit card or store cards as soon as you can, because even regular small amounts will make a difference.
If you have a large balance on a credit card with a high interest rate, one option to consider is a balance transfer deal. BNZ is offering 0% p.a. interest on the balance transferred for 12 months when you transfer a credit card balance you have elsewhere to them, as long as you have your main income paid into a BNZ transactional account. ** Plus they’ll give you support to help toward a zero balance. Note that if you use your card for new purchases, they’ll be at the standard purchase interest rate. See here for full details and terms and conditions.
Do you need a new house?
Babies may be tiny creatures but the stuff that comes with them takes up plenty of space. Is it time to upgrade your home, or can you simply have a de-clutter session? The cost of buying a new home goes well beyond a bigger mortgage. There are also moving costs, higher insurance, increased rates and possibly the real estate agent's commission.
Focus on getting good value for money. For instance, if you buy food with good nutritional value, then you're getting better bang for your buck. Here are a few more considerations and ways to limit the impact on the bank account when baby comes:
- Be conscious of your discretionary spending and don't fall into the trap of "stroller envy". Fancy toys are nice, but leave them for Grandma and Granddad to buy when they want to spoil the little ones. Your money is better spent elsewhere.
- Breastfeeding is certainly cheaper than formula, but don't forget to budget for a breast pump, bottles and associated feeding paraphernalia.
- Buying in bulk can also save you money (and many online nappy delivery services will deliver to your door, saving you the inconvenience too).
- Do your research. Scour the OHbaby! forums and ask advice from other mums about products that are good value for money. Sometimes you'll find it's actually more cost-effective to buy new and then resell on sites such as Trade Me.
- Buy unisex big ticket items such as strollers, cots and high chairs. That way you'll be able to reuse them for subsequent babies regardless of their gender.
With research and forward planning, you’ll be better able to manage your finances when your bundle of joy arrives.
Information taken from an OHbaby! magazine article by Rochelle Gillespie in August, 2014.
* Terms and conditions, and fees apply. Bonus interest paid monthly if your account balance is greater at the end of the current month than it was at the end of the previous month (not including interest earned during that time) and no more than one withdrawal is made per month. A “month” runs from the last business day of the previous month to the second last business day of the current calendar month.
** Rate subject to change. There are no interest free days on balances transfers. The minimum balance transfer amount is $500. Balance transfers are subject to approval, and terms and conditions. Only balances from non-BNZ New Zealand issued Visa, MasterCard, American Express, Diners, GE CreditLine, The Warehouse Financial Services Credit and Store Cards, Fisher & Paykel Finance issued Q cards and Farmers Cards are eligible for this special rate. After six months, any balance transfer amount still unpaid will revert to the standard annual purchase interest rate. For new cards: Lending criteria, terms and conditions, a $5 monthly fee and other account fees apply.
Adapted from an article in OHbaby! Magazine, by Rochelle Gillespie
This article was written in association with BNZ
For more information visit: www.bnz.co.nz