Prepare your finances for parental leave

A pregnant person sits at a low table in a house looking at a laptop, while using a calculator

What to consider before you go on leave to keep your finances in good shape, especially if you'll be your baby's primary carer

Going on parental leave? Congratulations and best wishes!

While you're preparing for the arrival of your baby, it's useful to prepare your finances as well.

Being a new parent can be hard, so think about costs and savings now.

If you have a partner, discuss finances now to avoid possibly stressful money discussions after your baby arrives.

Every family and child is different so it's important to work out what will be best for you. 

Consider income protection, health, and life insurance, especially if you're the higher income earner.

Avoid the gender pay gap

Recent New Zealand research by Motu showed the gender pay gap is larger among parents than people without children.

  • The hourly wage gap was 5.7 percent between men and women without children.
  • The hourly wage gap was 12.5 percent between men and women who were parents.

The gap is particularly marked for high-earning women.

  • “Prior to parenthood, these women experienced rapid income growth--they were on a trajectory to be very high earners.

  • "After they returned to work, often with reduced hours, their earnings were lower and grew at a crawl.

  • "A fast return to employment did have some benefits, though: their hourly wages didn’t fall as much as the wages of their slower-returning colleagues.” - Motu, 2018.

Trans and non-binary parents

Little research exists on how parenthood affects income and employment for rainbow people in Aotearoa. Research does show that they can face workplace discrimination and income inequity, as well as barriers to accessing birth and parenting services.

Read on for ideas on avoiding the gender pay gap.

Find out what parental leave and other benefits you're eligible for

Find out if you're eligible for paid parental leave and other unpaid parental benefits.

Find out if you're eligible for other support 

In some situations, you may be able to get financial help from Work and Income – for example, if you're on a low income, are a sole parent or are expecting a multiple birth.

Ask your employer about other benefits

Check with your employer to see if they'd consider offering other parental benefits.

If you have an annual performance review, this could be a good time to bring it up. Benefits could include:

  • your employer continuing to pay into your Kiwisaver while you're on leave
  • a one-off payment if you return to paid work for a minimum period after parental leave
  • flexible or reduced hours when you return to paid work
  • a four-day work week on full pay.

if your employer offers health insurance, ask if they can add your baby. Note – health insurance may not cover some baby-related expenses.

The impact of parental leave on annual leave payment rates

Annual leave is calculated based on your last year's earnings.

Your entitlement to annual leave keeps building up while you're on parental leave, but the amount you would be paid for annual leave is usually reduced.

For example, if you return to paid work after six months (half a year) of not being paid by your employer, and ask for annual leave straight away, your annual leave will be paid at only half your usual rate. 

Employers can choose to pay your annual leave at the rate of your ordinary weekly earnings, but they don't have to.

Consider asking your employer if they would be willing to pay annual leave at your ordinary weekly earning rate.

Discuss this before you go on leave and get any agreement in writing.

If you have unused annual holidays that you were already entitled to before parental leave, these are paid at your usual rate.

Costs to prepare for and what's available free

Babies can be expensive, but there are ways to cut costs.

You can probably rent, borrow or buy second-hand items such as furniture, clothes and a baby buggy.

When you're at home with your baby 

Some costs might be higher when you're home with your baby, such as: 

  • heating to keep your baby warm
  • water - you're likely to be doing more washing.

Many parent and baby health services are free unless you choose to get private care. Talk to your midwife about what's available. 

Find out more from Plunket about costs, money-saving tips and where to get support.

When you return to paid work 

A wide range of early childhood education – which includes childcare – is available in New Zealand. 

Check the Plunket website to find out more.

20 hours free ECE (early childhood education)

You may be able to access 20 hours of free early childhood education a week when your baby turns three. This is available if they go to an early learning service or kohanga reo that offers "20 hours ECE".

Adjust now to a lower income

If you're going to have a drop in income, start preparing now:

  • Try living on a lower income while you're waiting for your baby to arrive, and put aside savings. This can prepare you for the adjustment.
  • If you have a partner, discuss expectations about spending. If one of you is going to be the income earner, it can feel awkward for the other to spend.
  • Consider making a budget. The Sorted website has information and a budgeting tool.

Can you afford some time-saving luxuries?

If you can afford it, think about budgeting for services that will save you time once your baby has arrived, such as:

  • nappy service
  • food delivery
  • a cleaner.

Find out more

This article is partly based on Frances Cook's podcast, 'How to Baby-proof your finances - Kind of' and used with permission.

Listen to Frances's podcast.

This article was first published on 20 April 2023 and updated in May 2023 after the 2023 New Zealand Government Budget.


  • Counting Ourselves, accessed April 2023, (
  • Employment New Zealand, accessed March 2023, (
  • Cook, F, 'How to Baby-proof Your Finances - Kind of', Apple podcast, accessed March 2023, ( 
  • Inland Revenue Department, 'Budget 2023 Announced', 18 May 2023, (
  • Ministry of Education, '20 Hours ECE', accessed April 2023, (
  • Moir, J, 'Budget's Main Relief Slow to Land for Parents', 18 May 2023, (
  • Motu, 'Worsening of Gender Wage Gap One of the Penalties of Becoming a Mother', May 29, 2018, (
  • Parker, G, Ker, A, Baddock, S, Kerekere, E, Veale, J & Miller, S, '"It’s Total Erasure": Trans and Nonbinary Peoples’ Experiences of Cisnormativity Within Perinatal Care Services in Aotearoa New Zealand', Women's Reproductive Health, (DOI: 10.1080/23293691.2022.2155496).
  • Plunket, 'Planning Your Finances', accessed March 2023, (
  • Sorted, 'Planning for a Family', accessed April 2023, (
  • Wellbeing Budget 2023, 'Supporting New Zealanders With The Cost of Living', accessed 19 May 2023, (
  • Work and Income, 'Having a Baby', accessed April 2023, (

Updated 16 Oct 2023