06 Mar Budgeting for Having a Baby
The good news you’re having a baby. You’re excited! Then you start to worry. Will I be a good parent? Will I know what to do? And then comes the big one – how will we afford it? It’s true that babies cost money. But it’s also true that they don’t need to cost as much as baby product manufacturers would have us believe. Having a baby is one of the most exciting times in your life. While nothing can quite prepare you for the changes about to happen, one area that you can get a handle on is your finances.
Have a money conversation with your partner
To really comprehend what your financial situation will look like after your baby is born, it’s vital to have a clear idea of where you stand right now. For this reason, you should sit down and write out your current household income and expenses. Include any form of income that currently makes its way into the house and be brutally honest about your expenses. Talking about the changes that will happen to your family after you have a baby is important and these conversations should include money.
Some of the things to discuss may include:
- How do you want your family to function after your baby is born? For example, who is going to be the primary care giver? Is the primary care giver going to work? Answers to these questions will be informed by your own values and your current financial commitments.
- Do you need to change how you manage your day to day spending and saving?
- Do you need to revaluate your goals and priorities including financial ones? Should you delay major purchases or try and reduce your debt?
Case study: Jason and Emma’s first child
Jason and Emma are expecting their first child. They have had several conversations about how they are going to organize their lives after the baby and have agreed that Emma will take 9 months off work after the birth of their baby and she will return to her current job 3 days a week.
Emma has access to 12 weeks’ maternity leave and will be entitled to the paid parental leave from the Department of Human Services of 18 weeks on minimum wage. Emma also intends to take some annual leave. They will have a drop in their income and expenses such as child care to factor in after she returns to work.
Considering the odds and upcoming expenses, they decide to sell their second car and pay off their credit card debt before the baby arrives to reduce some of their outgoings.
Becoming a Single Parent
If you are having a baby and you are single, it’s important to research and plan for your life changes as soon as possible. There are important decisions to make about how you want to arrange your life after you have your baby that will impact on your finances. For example, do you want to care full time for the baby for a period, or work part time or full time?
Prepare during pregnancy
Being pregnant can be an emotional roller coaster, especially your first time. There are many new things to learn about and you will probably want to know all about the baby growing inside you, as well as what you need to prepare before the baby arrives.
It’s important to budget for any associated costs during pregnancy. These may include:
- Doctor and hospital bills
- Scans and special medical tests
- Maternity clothes
- Baby clothes and equipment
- Extra savings (if you can) for after the baby is born
It’s probably a good idea to talk to people who have children to find out what cost saving ideas they have before you go out and buy all the latest baby equipment. It’s true that babies seem to require a lot of stuff. When you begin to set up a nursery, it can seem overwhelming – and expensive. Chances are, though, that you’re being offered a lot of things you don’t need.
Manage your income while you are caring for your baby. Working part-time or taking time off paid work to have a baby can also affect your super. Work out ways to improve your super balance while taking time off paid work.
While giving birth to your baby with a private obstetrician in attendance, in a private hospital, might cost you up to $20,000, choosing a public hospital, attended by a midwife or the obstetrician on duty is a much more budget-friendly option. You won’t pay for labour or birth care, nor for your accommodation. You might find yourself out of pocket for some GP visits, pathology tests, ultrasound procedures or antenatal classes, but expenses are small by comparison with other models of care.
Budget for your new family
Start your budget with your current income and expenses. If you don’t know where your money goes, try tracking your spending for 2 weeks, then put the details in our budget planner. Add the extra expenses you’ll have once the baby arrives (nappies, baby food, nursery equipment etc) and make adjustments for any changes to your income if you or your partner take time off work.
Ask your employer about your paid leave entitlements like maternity leave, recreation or annual leave, long service leave or unpaid leave. To keep costs under control, think about buying second-hand goods. Check online, at specialist second-hand baby stores, garage sales and charity shops. Find out the retail price of new items so that you get a good deal. Family and friends might also have items they can lend you or hand-me-downs they can give you. Try to keep your bank balance healthy by sticking to your budget.
No matter when your baby is due, it’s never too late to start a savings plan. Even cutting a few dollars out of your expenses each week can be a great way to get started. The whole idea of your savings plan is to help you find the cash you need to start buying baby supplies and furnishings. Depending on how much you’re able to save, you might also want to put aside a bit extra to help out with living expenses after baby is born.
Some larger items can be put on lay-by and paid off over the term of your pregnancy. Other items may be delayed until your due date is much closer. Once you have an estimated figure in mind for how much you need, it’s time to work out how much you can trim out of your current budget. Every dollar you can save on current expenses can then be put towards building up your baby fund.
Develop some valuable cost-cutting habits and use them to help you reduce your expenses. Think about how much you pay for the things you already use and see if other providers are offering better value for money or cheaper alternatives. Keep an eye on the catalogues that arrive in the mailbox and watch for sales on items you normally buy.
If you know your budget only allows for $150 for grocery shopping, withdraw that amount of cash and leave the credit cards at home. You’ll be surprised how much more careful you are with your grocery choices when you know you’re stuck to a cash-only limit.
One of the biggest killers for any budget is the availability of easy credit, so remove that temptation. Leave the credit cards at home when you shop. Make a deal with yourself that you’re only going to pay for things with cash or from your savings. Make it hard for yourself to give in to those impulse purchases.
You could be eligible for government benefits such as Parental Leave Pay, Family Tax Benefit or Dad and Partner Pay. Depending on your income and assets, you may also be entitled to other benefits such as Child Care Benefit, Parenting Payment, Rent Assistance or a Health Care Card. Try to incorporate these benefits into your budget. You can call or visit the Department of Human Services for an estimate of payments for your family.
Child care will be one of your biggest expenses if you or your partner return to work. Before you go back to work, update your budget with changes to your income and childcare expenses. This will help you decide if returning to work will benefit you financially.
Contact the Department of Human Services to see if you’re eligible for the Child Care Benefit or Rebate to help you pay for child care.
Here are your child care options:
- Partners, relatives or friends: A great option if you are lucky enough to have this support.
- Childcare center or family day care: Costs, conditions and waiting periods vary. Contact several to compare them and see where places are available. Your local council may also have information.
- Workplace childcare: Some companies offer onsite child care.
- Nannies: For some people, a nanny is a viable option. The Department of Human Services can assess if you are entitled to Government assistance for in-home child care.
Your child’s legal protection
Do you have a will? Think about asking someone to be the guardian of your child if you and your partner should die and name this person in your will. The way you spend money will change when you have children. Getting your finances under control will give you peace of mind and allow you to relax and enjoy being a parent.
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