As Kiwi families change, so do our finances

The typical Kiwi family of a heterosexual married couple and two or three children is no longer the norm. In his new book, The New New Zealand, Professor Paul Spoonley of Massey University looks at how our families have changed. These trends include:

  • Increased divorce rates.
  • More single parents.
  • Same-sex partnerships now common.
  • Young adults spending longer in education and training.
  • Elderly family members living longer.

Of course, all these trends have impacts on family finances. Here are the top 8 ways that New Zealand families have changed, according to Professor Spoonley, and the possible financial implications.

1/ Solo parents and single-person households

About one in three of all New Zealand family households are sole-parent families. In the 2020s, single-person households will become New Zealand’s most common household type, and the increase in this household type will have been higher than in any other nation in the OECD.

Implications Sole-parent families have much lower incomes and so the risk of elevated poverty among sole-parent households is a major equity and policy issue. In 2013, the median household income for a couple with children was $92,000 but for sole parents it was $33,100.

2/ Decline of marriage

The formal commitment of marriage has been in decline for the last 50 years and has been replaced by cohabitation and partnerships. Kiwis also get married more than a decade later than they used to – the average age is now early 30s.

Implications In the eyes of the law, for relationship property matters couples are usually considered married if they’ve been together for three years or more, or less in many cases. If you’re in this situation, get in touch so we can put you in contact with a lawyer to discuss this further.

3/ Delayed first-born

The average age has crept up here too; New Zealand women in their early 30s have the most children. Women are a lot more likely to be in paid employment nowadays than was the case in years gone by.

Implications Women who take time off mid-career to raise children can be left behind. Time off work can also have an impact on the family finances so it’s crucial you plan for living on a reduced budget.

4/ Childless households

Aside from ‘empty nesters’, whose children have grown up and left the nest, declining fertility rates and a lower inclination to raise children means that many households don’t have children. Professor Spoonley reports that between 2006 and 2031, New Zealand will undergo one of the highest increases in the developed world for households with childless couples (56 percent, compared with Australia at 42 percent or the USA at 37 percent), while the number of couples who do have children will decrease by 12 percent.

Implications While many parents firmly believe that raising children is a priceless activity, less time and cost raising kids leaves plenty more funds in the back pocket for those who don’t.

5/ Re-partnering and blended families

New Zealand attitudes towards divorce relaxed during the 1970s and 1980s, leading to a greater number of blended or reconstituted families.

Implications Blending families and finances is an interesting legal area. Such situations are nearly always more challenging than might be first thought, and often require careful planning, such as:

  • Wills and Enduring Powers of Attorney need personalising. ‘Off the shelf’ versions, perhaps done online, are rarely up to standard for this.
  • When properly structured and maintained, a family trust can be a good asset protection and estate planning option in many cases.
  • Fair relationship property arrangements are a good thing to negotiate upfront, especially if partners are bringing different assets into the relationship.

6/ Culturally diverse families

Professor Spoonley reports that increased levels and diversity of migration have affected the nature of family units in New Zealand in various ways. Different cultures and religions have different family values and attitudes on many things, including child-rearing and customs.

Implications In any inter-ethnic family, financial matters should be agreed upfront. Common areas to watch out for might be immigrants to New Zealand who are too cautious, or many cultures believing in generosity to a level that many Westerners would consider extreme.

7/ ‘Beanpole’ families

Beanpole families are tall and narrow, in that they typically contain several generations, with low numbers in each generation. Often all generations are living in one household. They come about from older family members living with their adult children and grandchildren, perhaps because:

  • The older person has been left alone by separation or death and seeks company.
  • Of high rents and housing costs in major centres.
  • Increased longevity of parents and grandparents has increased the years in which members of a family might be part of a family unit, especially as care is required for old or young.
  • More recently COVID-19, as younger Kiwis return to the family home. These ‘boomerang kids’ left home for study, travel or work but then return home to live for short or long periods.

Implications If done well, this might be financially advantageous for all involved. Done badly it can lead to any number of issues, such as younger generations taking advantage.

Learn more:

Making it work when adult children move back in with their parents

How to kick your grown-up child out of the home

5 reasons why you should spend your kids’ inheritance

8/ Dispersed families

The dispersed family – families who do not live together in one location for various reasons such as work, education or familial responsibilities – is not new, it has simply increased in scale and importance. There are not many of us who don’t have family, including immediate family members, living either permanently or temporarily in other countries. Australia is the obvious example, and in the aftermath of the last recession (the Global Financial Crisis of 2008-09) many young Kiwis headed to “fly in, fly out” roles working in Australian mines or on oil rigs. Pasifika migrants have long done the same to fulfil familial and cultural obligations in countries of both origin and destination, and to maintain traditional rights.

Implications Work mobility is a good thing financially, as having someone with good earning power supporting family is clearly beneficial. International taxation is a fascinating area – the headlines about major tech corporations dodging tax are just the tip of the iceberg in this complex field. Specialist taxation advice is a must for anyone moving across borders, whether they are doing it regularly or in a one-off move. Wholesale foreign exchange rates can save people plenty on the usual banking fees too.

The bottom line

The standard Kiwi family is becoming anything but standard, and as families evolve, complex financial, legal and taxation issues can arise. These issues won’t be a problem for those who know how to navigate them or who know how to make the most of the opportunity their family situation offers.

About Milestone Direct Ltd

Milestone Direct Ltd
Milestone Direct Ltd is a full-service financial advice firm with a focus on retirement planning, wealth management, and ensuring your funds don't run out before you do. Milestone Direct is unique, with; no product provider ownership, no quotas, and all financial advisers are paid a salary instead of commission. Milestone Direct Ltd are already trusted as the official financial advice provider to organisations such as the NZ Defence Force, so you can trust them too. Call now for a free and no obligation initial consultation, toll-free 0508 645 378 or learn more at:

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