Having a baby?
We’ve developed this handy guide to help you plan your ﬁnances before your baby arrives.
Your life is about to change forever! With a baby on the way, there's a lot to prepare for, so it doesn't help to worry about your ﬁnances too.
With some careful pre-planning and budgeting, the cost of the ever-increasing number of 'necessary' baby items can become more achievable.
Cost of having a baby
A good start is to get a clear idea of what new expenses you’re going to be taking on by estimating the costs of the following:
Medical (giving birth and ongoing appointments)
Nursery setup (cot, changing table, baby chairs)
Food and formula
New parents will have to fork out for many baby expenses in their baby's ﬁrst year of life. It's easy to see how the costs add up when you consider how many initial, upfront costs there are, not to mention the ongoing costs of formula and nappies.
How to budget for having a baby
Take the time to ensure you ﬁgure out what your ﬁnancial situation is now and what it will be after your baby is born by following the points below.
1. Check your entitlements
Understanding the changes to your income and how that will impact spending is vital before your new bundle of joy arrives. Don't forget to check your eligibility for government-assisted beneﬁts such as paid maternity leave (available through Centrelink or directly through your employer), and the Family Allowance payment (available through Centrelink).
You may also be eligible for other benefits from the government like Child Care Benefit, Parenting Payment, Rent Assistance or a Health Care Card. Call Services Australia on 136 150 to find out if any of these can apply to you.
2. Start a savings plan
You may not have the same income after the baby is born if your partner or yourself are not returning to work for a while. Based on your current budget, determine how much you can save a month to help you afford the costs we listed above. Once you know how much this amount is, you can use our Savings Calculator to figure out how long it will take you to reach an end goal.
Over time the costs of caring for your child will change. By starting a savings plan early, your family will be more prepared for bigger expenses like education and a family home. Save money by putting small amounts away now into a savings account can make a big difference in future.
3. Reduce debts
Paying down debt or making extra repayments before one parent takes time off to care for the baby can help with your savings plan. If possible, avoid going on parental leave with high credit card debt. Paying down debts or paying off your credit cards is a good idea before you start putting money into a saving account. You can make significant savings by switching to a card with a lower interest rate, but make sure you read the ﬁne print ﬁrst. Be wary of the low introductory rate that jumps up when the introductory period ends, and find out if there is a high cost for balance transfers and annual fees.
After your baby arrives
You'll likely already have everything you need to care for your baby. After you're home and settled in, taking a look at your family health insurance policy is timely as it may need updating with paediatrics cover.
Don’t Forget Ongoing Baby Expenses
Once your baby arrives, the regular expenses to care for your little one kick in. Factor the following costs into your budget:
Child Care: If both parents return to work after the baby's arrival, the single biggest budget item will be child care. Child care costs vary by depending on where you live, the age of your child, how many days of care are required, and what type of care you use.
Clothing: Babies grow quickly. You’ll find many outfits may not fit for very long, and that you’ll constantly need to purchase bigger clothing.
Nappies: According to CHOICE Magazine, a typical baby goes through about 6000 disposable nappies with the total cost (of just the nappies, excluding wipes & other accessories) varying between about $1,800 and $3,000+ each child.
Baby Food: Tins of formula can range from $20-$40. If using formula, you may need to try a few different brands to find one that's right for your baby.
With these tips in mind, ensure you have a budget in place to support your growing family. Get in touch with the friendly local team at Horizon Bank today. We're here to help you with your banking needs.
The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant Product Disclosure Statement and Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.