If you’ve got a baby on the way or are thinking about having one in the future, it’s worth being aware of the upfront and ongoing costs likely to be coming your way, so you can plan ahead accordingly.
After all, according to AMP.NATSEM research, it costs an average of $144 a week to raise a child between the ages of zero and four, not including childcare, which can cost up to $140 a day.1
Money tips for expecting parents
If you or someone you know is planning on starting a family soon, here are some ideas to get your finances in order.
1. Consider the upfront and ongoing costs
These might include:
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baby clothes and diaper bag
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cot and mattress
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change table and high chair
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car seat and stroller
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food, bottles and formula
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childcare.
2. Make sure you’re across your medical expenses
Medical costs may include doctor and hospital bills, scans, birthing classes and special medical tests.
Also think about whether you want to have your baby in a public or private hospital, as there may still be out-of-pocket expenses with either option, even if you have Medicare or private health insurance.
3. Research your employer entitlements
Many organisations have their own parental leave policies, which may include various paid and unpaid parental leave entitlements for new mothers and fathers.
Check out whether your employer has such a scheme in place and what they offer. You may also want to find out if you’re eligible for any annual leave, long-service leave or regular unpaid leave if you’re planning to take time off work.
4. Explore the government’s paid parental leave scheme
If you meet criteria, primary carers of newborn or adopted children can apply for parental leave payments from the government, which provide the national minimum wage for up to 18 weeks.2
While it’s possible to receive government payments in addition to any payments your employer pays under its own parental leave policy, there is legislation before parliament that could change this.3
If you’re not sure how much time you can afford to take off work, ASIC’s MoneySmart parental leave calculator can help you crunch the numbers.
5. Investigate other government assistance options
You may be eligible for other assistance such as Dad and Partner Pay, which provides up to two weeks of government funded pay, and the Family Tax Benefit, which helps with the cost of raising children.
There are also a range of additional payments for families, such as assistance with child care fees that also may help. See the Department of Human Services website to find out more.
6. Create a budget with the information you’ve collected
Once you’ve considered the costs, any entitlements you may be eligible for and how long you may take off work, it’s important to set up a budget and start putting money aside.
When you do this, remember you’ll need to account for existing day-to-day expenses, such as utility bills, groceries, petrol, rent or home loan repayments, and other debts you might be paying off.
Remember to also factor in any additional sources of income you could be receiving and whether you have family that may be able to assist in regard to things like childcare.
Meanwhile, you might be interested to know that the new AMP Bett3r Account can help you manage your money, with pay, save and spend accounts.
7. If you can, prioritise your existing debts
If you do have existing debts—credit cards, personal loans or a home loan—it’s probably a good idea to reduce these debts as much as you can before the baby arrives, particularly as, like with most things, there may be unexpected expenses along the way.
Things worth looking into might include:
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Reviewing your credit card situation and whether you’re really getting a good deal
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Rolling your debts into one if it means you’ll pay less in fees and interest charges
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Ways you can pay off your home loan faster or refinancing so your loan is more cost effective.
Need help?
Starting a family is a significant life event, so please contact us on PH 07 55931215 to explore your options.
Source: AMP 28 February 2017
1 http://media.amp.com.au/phoenix.zhtml?c=219073&p=irol-reportsNATSEMArticle&ID=2076405
Figures from the 2012 AMP.NATSEM report – The Cost of Kids: the cost of raising children in Australia
2 https://www.humanservices.gov.au/customer/services/centrelink/parental-leave-pay
3 https://www.humanservices.gov.au/corporate/budget/budget-2015-16/budget-measures/families/paid-parental-leave-changes