Welcoming a baby into your family is one of the most joyous occasions of your life. But just like anything worth celebrating , it’s not without its expenses.
How quickly they grow! The bills, that is.
Did you know it costs roughly $300,000 to raise a child from birth to age 17?
If you break that down, that’s $1470 a month. This can put a significant strain on your monthly budget and mortgage repayments.
Rest assured, however, there are several steps you can take in advance to minimise the impact on your new family’s bottom line.
1. Baby essentials
The upfront expenses of having a baby are really going to put out your budget, hard. So it’s best to obtain the items you’ll need well in advance to spread out the initial costs.
Of course, you can purchase a brand new bassinet, playpen, clothing, car seat, cot, stroller, toys, high chair and changing table.
But chances are you don’t really need that fancy, brand new $1,000 cot. Instead, focus on the babies needs instead of your wants.
There’s absolutely nothing wrong with obtaining gently-used items second-hand, through trading websites or for free from family members or friends.
2. Your rights to paternal leave and corporate leave
If you worked before having your baby and made under $150,000 annually, you could be eligible for the government’s Paid Parental Leave program.
You do have to apply, but if eligible you are entitled to 18 weeks of minimum wage benefits (amounting to $719.35 per week before taxes).
There is also a two-week partner and dad pay option available, and take time to look into your company’s leave programs.
3. Plan for Childcare
Unless you plan to stay home with your children or have family members who will help provide childcare, it is a good idea to get your name wait-listed at several childcare facilities.
Availability is hugely competitive , so getting on the lists quicker will help in the long run. You can use the Childcare Subsidy Estimate Calculator to figure out if you’re eligible for entitlements.
4. Update your life insurance
It’s not uncommon for Australians to have disability and death benefits through their super fund.
However, while the life insurance coverage may have been adequate pre-children, there’s a good chance it won’t be enough for a single parent to comfortably raise a child.
Additionally, you don’t want to fall into the trap of just insuring the breadwinner in your family. Each member should have coverage in case something happens to one, or both, of the parents. This can be a complicated area to navigate alone though, so be sure to seek financial advice from a professional.
5. Future proof yourself…
Even if you don’t have significant assets or debts, you need a Will if you have children.
Not only does a Will specify what your family does with your belongings (including your super and insurance), but it also specifies who makes decisions if you can’t make them yourself, and who will take over raising your child if both parents pass.
6. Pay off existing debt
If it’s possible, prioritise your existing debt and work on paying it down – or off – before the baby is born.
Once the baby arrives, you may not have a whole lot of spare money to put toward any existing balances. Consider speaking to us about consolidating debts or refinancing your loans or mortgages into one with a lower interest rate.
7. Update your monthly budget
One of the best things you can do is update your monthly budget with your newest family member in mind. It’s also great to start living on this budget before the baby arrives, – start practising living on less.
You can update or create your budget using ASIC’s Budget Planner. Don’t forget to include your quotes for childcare and any new miscellaneous expenses you’re likely to incur.
8. Start an emergency fund
If you don’t have an emergency fund, now is a great time to start one. Aim to have at least three to six months worth of living expenses saved, with the goal of at least a year’s expenses.
This can provide a buffer that you and your family fall back on if you run into unexpected expenses like an accident, the car breaking down, or something in the house needing immediate replacement.
Having a baby is one of the most life changing events that can happen in your life. The last thing you want to be doing during this happy time is to worry about your finances. That’s why it’s so important to prepare as early as possible.
We would love to help make sure that your first few months as a new family are stress free as possible- just talk to us !