Congratulations – you’re having a baby! This is an exciting time in your life – and one that’s full of change. That’s why it’s important to start planning now to make your new life easier. This includes taking a good look at your finances and making sure you’re financially ready for all the additional expenses that come with parenthood.
Here are five things to sort out now so you’re financially ready for parenting.
1. Check that you’re eligible for parental leave
Depending on how much you earn and how long you’ve worked for, you and your partner may be eligible for the Australian Government Paid Parental Leave scheme. There are two possible payments: Parental Leave Pay and Dad and Partner Pay – and you could get up to 18 weeks of cover.
2. Start budgeting for one more
If you’re not eligible for the Paid Parental Leave scheme, or you plan to take unpaid leave as well, you’ll need a budget to see how long you can get by on a smaller income – or to help you save now to cover costs.
You might already be a whizz at budgeting for your current lifestyle. But having a baby brings additional expenses. For couples, it could also mean that at least one of you may be out of the workforce for some time. For single parents relying on one income it’s even more important to have a good budget in place if you won’t be working.
So, spend a couple of weeks recording all your day-to-day expenses – and go through bank statements to work out monthly, quarterly and annual costs. Then get online and find a budgeting tool to help you set up a monthly budget and track your expenses.
Once you have a budget, you’ll be better placed to work out how much extra leave you can afford if you wish to stay home, and how much you can spend on things like childcare and items such as prams, cots and baby capsules. Don’t forget to factor in extra weekly costs like nappies.
3. Create, or update your Will
This probably isn’t on top of your list at your stage in life – but as someone about to be a parent, it should be. As well as stating who you want to leave money and property to, you can also use a Will to choose a guardian for your child, if you and your partner were to pass away. If you don’t do this and the worst was to happen, the court could decide on your child’s guardianship – and it may not be your choice. Find out more about what happens when you don’t have a Will.
4. Consider childcare now
It’s estimated that the average cost of childcare in Australia is $112.661 a child per day. This varies, depending on where you live and the type of care you choose – either a childcare centre, family day care, or a nanny – but it’s a major expense for new parents. If you’re keen on using a childcare centre, waiting lists for places can be long, so it’s wise to start looking for the right place as soon as possible.
You might also find other creative ways to save on childcare. Grandparents, aunts or uncles may be able and willing to help out. Or if you have friends or family with young children, you could share costs of a babysitter, or take turns in caring for the children.
5. Make sure you have enough life insurance
If something happened to you or your partner, life insurance will help make sure that your child’s physical and educational needs are taken care of. Exactly how much you’ll need depends on how much you earn now, your fixed expenses like mortgage repayments or rent, and the kind of education you want for your child.
Remember, even if you have some life insurance through your superannuation, it may not be enough to cover all your future costs. So, it could be well worth getting an additional policy outside of super – just in case.
Start planning today
Knowing you’re financially prepared for your little one can give you peace of mind during this busy time – so you can enjoy your new baby when they arrive.
