Kiwi families are changing – what does this mean for your money?

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 are now common
• Young adults might spend longer in education and training
• Elderly family members live longer

Of course, all these trends have impacts for the family finances. Below are the top eight ways that NZ families have changed, according to Professor Spoonley, combined with an accompanying comment about what that might mean financially.

1. Solo parents and single-person households

Currently, about one in three of all NZ family households are sole-parent families.

In the 2020s single-person households will become NZ's most common household type, and the increase in this household type will have been higher than in any other nation in the OECD.

So what for the family finances?

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The formal commitment of marriage has been in decline for the last 50 years and has been replaced by cohabitation and partnerships.

Kiwi’s also get married more than a decade later than they used to – the average age is now in the early 30s.

So what for the family finances?

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; NZ women in their early 30s have the most children.

Women are a lot more likely to work nowadays than was the case in years gone by.

So what for the family finances?

Women who take time off mid-career to raise young children can be left behind career-wise. 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, NZ will have undergone one of the highest increases in developed households with childless couples (56 per cent, compared to Australia at 42 per cent or the USA at 37 per cent), while the number of couples who do have children will decrease by 12 per cent.

So what for the family finances?

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.

Learn more:

• ‍‍Financial warning signs in a relationship
• Prenuptial agreements: safeguarding love and assets

5. Re-partnering and blended families

NZ attitudes towards divorce changed through the 1970s and 1980s, leading to a relaxing of morals around divorce and a greater number of blended or reconstituted families.

So what for the family finances?

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

• Wills and Enduring Powers of Attorney need personalising – “off the shelf” versions, perhaps done online, are rarely up to standard here
• 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

Spoonley reports that increased levels and diversity of migration have impacted on the nature of family units in NZ in various ways.

Different cultures and religions have different family values, and attitudes toward many areas including childrearing and customs.

So what for the family finances?

In any inter-ethnic family, financial matters should be agreed-upon upfront. Common areas to watch out for might be that immigrants to NZ 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 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 Kiwi’s might return to the family home. These are sometimes called "boomerang kids", who left home for study, travel, or work, but then return home to live for short or long periods

So what for the family finances?

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

8. Dispersed families

The dispersed family – families who do not live together in one location for various reasons: work, education, or familial responsibilities, such as care - is not new; it has simply increased in scale and importance.

Over a million Kiwi’s now live overseas – 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, 2008-09) many young Kiwi’s 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.

So what for the family finances?

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 is 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 of 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 around the issues, or who know how to make the most of the opportunity their family situation offers.