Diana Clement: Family joys come at a price

The economy needs you to do it, but can the family finances stretch to cover having children?

It's probably pricier to have children than to buy a house and, these days, they're unlikely to support us in our old age as they may have in the past.

From the $20 you spend on that first pregnancy test to the day you buy junior's new school bag, the average parent will spend an estimated $33,000, says Karen Scott, founder and editor of popular parenting magazine Tots to Teens. That's not far off the median annual earnings for New Zealanders, excluding beneficiaries, which stands at $31,907 according to the Department of Statistics.

It's not the cost of nappies and Barbie bicycles that really eats into the family budget.

What really costs the money, says Scott, is spending time with your children. It's the loss of income.

"This is particularly the case where a professional parent/s have taken maternity leave to be with their child."

It's a Catch 22 situation, which leaves many professional women with a dilemma.

If they stay home full time, then the family finances can be $60,000 to $70,000 worse off a year. But if they go back to work, the cost of childcare means they are working for peanuts.

At Kindercare Learning Centres, a full-time childcare place costs between $185 and $253 a week for a six-month-old baby. And if your hours or job are demanding, then you may well opt for a nanny.

Good nannies do household jobs like cooking the children's dinner, tidying their rooms and buying the groceries. They often pick older children up from school and ferry them to and from activities such as sport or music lessons.

If you want to go back to work full time you'll probably need a nanny for 50 hours a week, says June Falvey, director of Ponsonby-based Poppetts, which provides nannies to professional parents.

Falvey says families can expect to pay $17 an hour for a good nanny, which amounts to $850 a week plus ACC levies. You also need to pay a 3 per cent nanny bureau fee on top of that for the first 12 months.

After six months, your nanny is entitled to sick leave, so you may well find yourself having to pay $185 extra for a replacement every day your nanny is away.

Just this week Jacki McKay, a former high-flying marketing executive, had to turn down a job she'd been head hunted for because after paying for a nanny she would have taken home $5 an hour from a position offering more than twice the average New Zealand earnings.

If McKay had employed the nanny more than 30 hours a week she would have had to deduct PAYE from the nanny's gross wage and pay it to the IRD monthly, provide an employment contract and deal with employment-related issues.

Some mothers, says Falvey, are prepared to return to work even though much of their income will be swallowed up in childcare costs.

Sometimes they're put under pressure to do short-term contracts on maternity leave. Or they simply want to keep a foot in the employment door.

McKay has one friend who knowingly makes a loss by going to work, but enjoys her job.

If Prime Minister Helen Clark wants the McKays of this country back in work to raise New Zealand up the OECD stakes, then she will have to provide more financial incentives.

Financial planner Philip Holland is an expert with his money. Even so, the family struggled when his wife, Charlotte, who had the larger salary, gave up work when their first of three children came along a few years earlier than planned.

The couple's discretionary spending dropped from $250 each a month, to $150, $50 and then $5 after they found that it was uneconomical for them to both work once they took childcare into account. These days, Holland's income exceeds that of the double income the family had before children. Even so, they have to budget carefully to make ends meet.

Holland, who works for Tauranga-based Harmer Parr, advises those who are thinking about having children to get their financial structures in place first, such as putting your family home into a trust. Make sure you've got a good budgeting system that involves both partners, pay off chunks of your mortgage and clear credit card and hire purchase debts.

"You should also have a rainy day account at arm's length from your Eftpos card."

Just this week, Social Development and Employment Minster Steve Maharey launched an advertising campaign highlighting increases to childcare assistance from October. That increase, and increases to the family assistance and accommodation supplement, will benefit about 55 per cent of all families.

Working families will be eligible for up to $156 a week a child in childcare assistance. In addition to these changes, childcare assistance is now available to families on higher incomes. But our childcare subsidies are still lower than those of countries such as Iceland and Denmark where three women in four work.

Without heavily subsidised childcare then, the McKays and Hollands of the world are unlikely to use their training and skills in the paid economy.

The freephone number for Family Assistance information is 0800 227- 773 and for Accommodation and Childcare it is 0800 774-004.