New Zealand’s cost of living crisis has reshaped what a “comfortable” family life looks like. Today, even a household earning $200,000 can struggle to get ahead, especially once childcare, housing, and everyday expenses stack up.
How the Cost of Living Crisis Eroded the One-Income Model
For many families, the dream of having one parent at home simply doesn’t work anymore. While single-income households were common in the 70s, 80s and 90s, rising inflation and shifting cultural norms have completely transformed that equation. Household expenses have surged – groceries, insurance, and everyday costs have all climbed sharply, with inflation rising 23% in just the last five years. And although mortgage rates may be easing, the overall cost structure is still far higher than it once was.
Even families earning $200,000 a year are finding themselves going backwards once childcare and reduced working hours are factored in. What used to afford a home, a holiday, and steady mortgage repayments now barely covers the essentials.
Two Incomes Became the Norm - and the Cost of Living Adjusted Upward
A big part of today’s cost of living crisis stems from the rise of dual-income households. After World War II, women entered the workforce in large numbers – a structural shift that never reversed. By the 1960s, fewer than 40% of women in Aotearoa were in paid work; today, over 67% are part of the labour force, one of the highest rates in the OECD. As more income flowed into households, prices adjusted accordingly, pushing up the long-term cost of living.
This means stepping out of the workforce today has bigger consequences:
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Reduced KiwiSaver contributions
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Missed salary progression
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Less financial buffer
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Higher debt-to-income pressure
For many families, losing one income isn’t just a lifestyle choice – it fundamentally changes their future financial trajectory.
Childcare Costs: The Silent Killer of the Single-Income Household
Childcare alone can erase most of a second income. Typical daycare fees range from $250 to $400 per week per child, plus $100-$150 for after-school care once kids reach school age. Families with two or more children can easily face costs of $20,000 per child, after tax.
It’s no surprise many parents say returning to work “isn’t worth it” in some cases, their entire income would simply be absorbed by childcare.
For households earning under $60,000–$70,000, the maths simply doesn’t add up. Even on a higher income, the gap between costs and take-home pay can be razor thin.
Planning Ahead Matters More Than Ever
For expecting or future parents, the transcript makes one thing clear: preparation is everything. Having an emergency fund, paying down debt early, budgeting well, and buying property sooner all create more breathing room once children arrive. A household with a $200,000 mortgage has far more flexibility than one with a $1 million mortgage under the same childcare pressures.
And for those currently struggling? You’re not alone. This pressure is widespread, and the financial strain many families feel is increasingly the norm – not a personal failure.
Key Takeaways
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Inflation has risen 23% over the past five years, worsening the cost of living crisis.
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Even $200K incomes can struggle to support a single-income household.
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Childcare costs of $250-$400 per week per child make dual incomes a necessity.
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Dual-income households drove long-term cost increases across the economy.
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Stepping away from work affects KiwiSaver, career progression, and future earnings.
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Emergency funds, budgeting, early home ownership, and debt reduction are critical.
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Many families are facing the same pressures – you’re not alone.
Next steps
If you’re navigating these pressures, Lighthouse Financial can help you build a plan that actually works for your family. Speak to Lighthouse Wealth today.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
