The unexpected costs of having a child in New Zealand

This article was created in collaboration with Rupert Carlyon, the founder of KiwiSaver provider kōura and father-of-three.

When it comes to raising kids, it's a bit like being on a rollercoaster ride in the dark. Unpredictable, surprising, and occasionally, expensive. There are some common and anticipated costs of having kids, like baby gear, childcare and so forth. But there are also plenty of hidden costs of having a child that can take you by surprise if you’re not prepared for them.

From unexpected school holidays to lost rugby balls and surprise school activities, your little ones can unknowingly throw a spanner into your financial plans. But here's the thing: with a bit of foresight and savvy planning, you can cushion these financial bumps. Let's explore how. 

1. When school becomes a ‘maybe’ 

Teacher-only days. Strikes. Illness. One day your child's in school, the next day, they're at home, and you're scrambling to arrange care or take time off work. These days off can potentially mean losing a day's pay or forking out for an expensive babysitter. The solution? Realistic planning. 

Firstly, take stock of your workplace's flexible work policies. Could you potentially work from home or adjust your hours on such days? Next, consider establishing a network with other parents to share care responsibilities. And most importantly, create a 'school off' fund. Setting aside a small amount each month will build up a reserve, ensuring that unexpected school days off don't throw your finances off track. 

This goes to show just how important it is to build and maintain an emergency fund, especially if you have a young family to grow. We’ll return to this shortly. 

2. The case of the broken and lost 

From lost raincoats to broken rugby boots, kids are uncannily good at losing or breaking things. Sometimes it’s a teachable moment about responsibility (think: lost rugby ball). Other times it’s genuinely an accident, the normal wear and tear of items, or things get stolen.  

In many cases, you’re simply left covering the cost (hello, winter without a raincoat), which can get expensive. For example, if your child kicks a ball through a neighbour’s window, repairing may cost $1,000. 

To manage these inevitable incidents, consider a few strategies. Opt for second-hand items via platforms like TradeMe or Facebook Marketplace. Not only does this save money, but it also lessens the sting when items go missing or get broken. 

Next, adopt a proactive replacement strategy. Don’t wait for those rugby boots to give out completely before seeking a replacement. This allows you to hunt for bargains without the pressure of urgency. 

Once again, make sure you have a good-sized emergency fund ready to tap into. And for more significant damages like a broken window or a car accident, don't forget about insurance. Your house and contents policy often covers this kind of mishap, so don't hesitate to use it.  

3. Surprise! It’s time to pay for activities 

One day, your budget is neatly balanced, and the next, you're hit with an unplanned school trip or a last-minute swimming event. These surprise costs can quickly become a slippery slope if not planned for. And here, an emergency fund specifically for 'child-related surprises' can be your lifeline.  

By allocating a portion of your income regularly to this fund, you'll be better equipped to manage these unforeseen costs without disrupting your normal budget.  

So, how do you build this safety net? Start by setting aside a regular amount each month, treating it as a non-negotiable expense just like your other bills. The amount doesn't have to be significant right off the bat – even a small contribution can quickly add up over time.  

It's also important to review this fund periodically, especially as your child grows, as the nature and cost of surprise activities can evolve over time. Your three-year-old might only have occasional playdates, but your teenager might have an unexpected opportunity to join an overseas school trip. 

Finally, consider opening a dedicated savings account for this fund. Look for one that offers a good interest rate and allows for easy access when needed. Having a separate account helps resist the temptation to dip into it for non-emergency expenses. 

The hidden costs of having a child: the bottom line 

Raising kids is often a juggle of love, chaos, and unexpected expenses. But remember, while the first two are inevitable, the last one can be managed. Planning for the unexpected won't take away the surprises, but it will make them a lot more manageable.  

By establishing an emergency fund, you're not just protecting your budget. You're also creating an environment where your child can explore various activities without financial stress limiting their experiences. After all, unexpected adventures often end up being the most memorable parts of childhood – for them and for you.  

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Crayon’s Financial Baby Prep Program takes you through a comprehensive budgeting exercise to help you plan for all the expected and surprise costs of having a child. Ask your employer if they offer the Program.

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Now for the important legal part: The information we provide is general and not regulated financial advice for the purposes of the Financial Markets Conduct Act 2013. Please seek independent legal, financial, tax or other advice in considering whether the content in this article is appropriate for your goals, situation or needs. The information in this article is current as at 18 June 2023.

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Stephanie Pow

Founder & CEO of Crayon

Rupert Carlyon

Founder & Managing Director of kōura

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