Did you know that the average middle-income family will spend around $10,000 on child-related expenses during the first two years of their life? Finding out that you’ve got a little bundle of joy on the way is an exciting time! A baby’s arrival means big changes to the family finances, but the last thing you want to worry about is money. With proper planning in place you can keep your finances under control and enjoy all the best things about having a baby. While it is impossible to know exactly how much you will need to cover pregnancy, birth and postpartum expenses, there are things you can do to ensure that you stay afloat.
Here are 5 ways to ensure you can prepare for your first child.
#1 Prepare during pregnancy
Being pregnant can be daunting yet exciting, especially if it’s your first time. There are so many questions floating around your head and so much to learn.
During the first trimester sit down with your partner and take a note of any associated costs you could face during the pregnancy e.g. Doctor and hospital bills, maternity clothes, baby clothes and equipment.
#2 Start a budget
Create a budget with your current income and expenses. Then include the associated costs during the pregnancy and (if you can) a savings pile for when the baby is born.
Consider what you plan to do about work once the baby arrives. Do or your partner plan to stop working for a period of time or cut back hours? These decisions will will affect your income, so you need to plan how you’ll manage financially during these times. Inquire about paid leave entitlements like maternity leave, recreation or annual leave, long service leave or unpaid leave.
#3 Be smart with baby accessories
We all know that with a baby comes enormous amounts of baby gear. As new parents you may get tempted to spend lots of money despite it not being in your budget.
In order to keep money under control, consider purchasing second-hand items such as clothes and prams. Check online, at second-hand baby stores, select garage sales and charity shops. Your family and friends may have accessories or leftover nappies that they can give you too. You can also save a lot by buying things in bulk, like nappies and formula (if you choose to bottle-feed your baby).
#4 Research medical bills and financial help
Most parents automatically assume that their medical expenses are covered by Medicare. What you may not realise is that Medicare only covers you for costs you incur while you’re in hospital. Private health insurance has its own issue with insurers usually having a 12-month waiting period before issuing pregnancy cover. Make sure to review your policies when you are planning to have children.
Be sure to check whether you and your partner are eligible for government benefits such as Parental Leave Pay, Family Tax Benefit or Dad and Partner Pay. Depending on your income, you may also be entitled to other benefits such as Child Care Benefit, Parenting Payment, Rent Assistance or a Health Care Card.
#5 Consider the cost of child care
Childcare is expensive! It can be one of your biggest financial outgoings if you or your partner return to work. There are several options that you may consider. When looking at child care centres keep in mind that costs and conditions vary widely so shop around for one that ticks all the right boxes. Relatives or friends could be in a position and willing to help support you with childcare which could save you money. Or a nanny service could be beneficial for your situation.
Before either of you go back, update your budget with the changes to your income and childcare expenses. This will help you decide if going back to work will benefit your family financially. Or if the cost of childcare will be similar what you would be earning (after tax) should you choose to go back to work.