Author Katrina Shanks, CEO Financial Advice NZ Article originally published in

Stats NZ recently released information that could have implications for living standards into the future.

What it told us was in the year to March, New Zealand’s birth rate had dropped to its lowest-ever level – 1.85 births per woman. That’s down 1.1% since 2019, and it continues a trend that’s been evident for decades.

As recently as 2010, the rate was 2.17 births. In 1960, it was around four births per woman.

There are several reasons for this.

Demographers point to a growing societal acceptance of child-free lifestyles, women delaying having children due to better access to higher education and jobs, easier access to contraceptives, and choosing not to have children due to an increasingly precarious economic environment – coupled with high house prices.

It’s that pressure on household budgets, perhaps more than anything else, that is set to ensure the downward trend continues for the foreseeable future. It has certainly made having children much more of a question of affordability than it ever has been.

If you’re considering having children, what’s the best path?

First up, having a child is an expensive business, and most people tend to underestimate it.

Research by AMP’s Financial Wellness Unit in Australia puts it into perspective.

It found planning for a baby causes greater financial stress than actually having the baby itself, while more than 70% of prenatal parents experienced financial stress in the 12 months before the birth, compared to 45% of those who already had a child.

So how do you avoid that?

Like in most things financial, making a plan is the best place to start.

You’ll need to determine what you want for the new baby’s room, its clothing, prams, car seats/capsules, and other key items,

The earlier you work out roughly what you may need, the better. This will pay dividends in the long run.

Planning early also means there’s a lot less you have to worry about closer to the birth, and you can concentrate on taking care of yourself – and avoiding some of that stress.

I know couples who have put everything into a spreadsheet and planned things down to the smallest detail, and that seemed to work.

That level of planning may not be for you, but however you do it here are some basic things to consider that will help.

It’s advisable to follow the usual rules when looking at a budget: see where you can cut down on discretionary spending as much as possible. That should give you a clearer idea of where you’re at and where some hurdles may lie.

It’s also good to ring-fence spending for the baby, so you can see where you are going and how much you are spending.

So, open a separate bank account and put a little away from your wages every week. Even $20 a week doesn’t take long to add up to a sizeable sum that will take away a lot of pain as the time comes nearer.

Write down everything you think you will need – change table, pram, cot, nappies, formula, toys, clothes – and price them, so you have an idea what you could be up against. You could even start slowly buying clothes early to spread the load.

Ask yourself if you really need to buy prams, car capsules, bassinets, cots, et cetera, brand new?

They cost hundreds of dollars each, but your baby may grow out of them within a year or so. If you really want to buy new, try to get a pram that converts to a stroller later on, or a cot that converts to a bed.

Otherwise, buying second hand is worth considering because there are some great bargains to be had. Remember, most of the time things such as cots and highchairs have had a short life with their first occupier, so are usually in good condition. In the case of capsules and car seats, make sure their safety period hasn’t expired and you are certain they are still safe to be used.

Parents and friends love to give gifts when a new baby is born, so maybe you could start a gift register at a baby shop which means you won’t get double ups and you’ll get what you need.

You may know many parents who have kids who are slightly older and would love to pass on some of their baby things to a new home. Or even start a bag swapping club where everybody adds things to the bag and it goes to the next person. There is nothing like swapping amongst friends.

Another good idea is to get onto online chat rooms to see what others are doing. You’ll pick up lots of good ideas and maybe even a bargain or two.

As part of your early planning, you should also work out how your income will work after the baby has arrived.

Parental leave plays a big part in this. If you or your partner have worked at least an average of 10 hours a week for the 12 months before the expected birth, one of you is entitled to 26 weeks of government-funded parent leave payments, or 52 weeks of unpaid parental leave.

If you are a two-income family and you need to be earning two incomes, you will want to decide who will stay at home with the baby after the six months paid leave runs out. There are many forms of leave you can use in this period – annual leave, special leave, or time off in lieu. Most employers will help you work out these details, so you can have a fair idea of what works best for you.

You can also put some income aside before the baby arrives which you can use to supplement your income when the baby does arrive, to allow you more choices around how long you can stay at home if you need a double income.

As you can see, there is a lot to think about when it comes to starting a family. Some of it is fun (outfit shopping, nursery decorating, playing with names) but a lot is boring, though necessary.

When we started our family, we worked hard to have some savings that would allow us to supplement our income while we were a one-income family. In addition to this we also made a lot of the baby things such as cot blankets and clothes, and redecorated a baby room ourselves to save money.

As my financial adviser would say (as he says this with everything) – plan, plan, plan, and if in doubt, seek advice.

As for the implications of a low birth rate on living standards – it means there will be fewer people paying taxes to support a growing number of older people, who rely on government superannuation, or on others in the welfare system.

So go forth and multiply – but plan well.