Becoming a parent can be an exciting journey. It can also be an expensive one. We’ve put together some tips for thinking ahead and managing the financial aspects of raising a family.
1. Consider the upfront costs
Before having a child, it pays to consider the upfront costs. These may include:
- Baby clothes and equipment—a cot and mattress, nappy-changing table, high chair, car seat, stroller and nappies, just to name a few.
- Upgrades at home—you may want to paint and decorate a nursery.
- Maternity clothes.
- Doctor’s bills and hospital expenses.
- Medical tests and scans.
2. Work out the ongoing costs
It takes a decent amount to raise healthy, happy children. And once your baby’s born financial expenses only increase.
According to the AMP.NATSEM Cost of kids report 2013, a first child can cost on average $281 per week from birth to age 24. Costs for things like food, clothes, child care, education, hobbies and a range of other things can continue eating into your household income for a long time.
3. Set up a budget
When planning to balance your household income and expenses, use our budget planner. Factor in your household income before and after the baby’s born (taking into account any loss of income) and consider:
- Essential living costs—e.g., regular ongoing expenses and loan repayments or rent costs.
- Upfront costs for things like baby expenses and medical costs.
- Paid parental leave you or your partner may receive from your employer.
- Government leave scheme which may provide 18 weeks of pay at the minimum wage—find out more at the Australian Government website.
- Child care and whether your family can step in if you or your partner returns to work.
- Ongoing costs. Plan ahead as far as you can for these. You may even want to consider whether you’ll need to cover school fees down the track—use our cost of education calculator.
4. Set up a savings plan early on
With a budget in place, you’ll understand the costs you’ll need to cover. And when it comes to meeting them, everything can be easier if you set up a baby savings plan and automatically save money for upcoming expenses.
The earlier you start saving the better. So even if you’re not sure how soon you’ll be starting a family, you can still put a savings plan in place today.
5. Regularly review your spending
Once your baby is born, sit down every month and evaluate your spending. Aim to find ways to cut your spending. The TrackMYSPEND app can help you understand any new spending habits so you can manage them and stay on track.
It’s a big change
Starting a family is a major life event, so it’s important to seek help in managing your finances if you need to. Find a financial adviser and get some professional advice as early on as possible. That way you can make the most of any money you earn before the baby’s born and avoid financial stress at a time that can be one of life’s most special.
Find out why your cash flow could be the secret to better budgeting.