Be financially prepared for your new arrival

When you’re having a baby it’s normal to focus on the practical aspects of preparing for the arrival of a newborn. In fact, there are so many things to consider that people often overlook the financial considerations. By taking the time to consider your finances ahead of time, you’ll be able to avoid financial pressures and really enjoy the special time with your new family member.

1. Expenses associated with having a child

The expression ‘the best things in life are free’ doesn’t ring true where babies are concerned, because even though starting a family is likely to be one of the best things you experience in your life, it certainly isn’t free.

• Hospital costs: If you choose to give birth in a private hospital, the average total cost is $9,421.1
• Set-up costs: Setting up your home to accommodate a baby requires many new items such as cots, car seats, capsules, stair rails, high chairs, prams, etc. The good thing about these items is that you don’t necessarily need everything on day one which allows you to shop around. You can also keep costs down by buying second-hand or borrowing items from family or friends.
• Living costs: The average cost of raising a child between the ages of 0–4 is $7,500 per annum.2 This equates to an extra $144 per week to look after your baby.
• Childcare costs: If you plan to return to work and don’t have family around who are willing or able to babysit for you, you will have to use childcare. There are a number of different childcare options to choose from but the average childcare fees are more than $100 per day.

2. Changes to income levels

If you, or your partner, are planning to take time off work after the birth of your baby, you need to adjust to changes in the level of household income. To prepare, you should gradually adjust your budget to live off one salary.

Some employers offer paid maternity or parental leave, so it’s worthwhile taking a look at your employment contract or talking to a human resources representative at your place of work to determine what paid leave you may be entitled to.

The length of time that you need to live off one income depends on how long you plan to take off work. For example, will you return in 3, 6 or 12 months in a full time or part time capacity?

3. Financial assistance

With extra expenses on the way and a drop in income expected, it’s comforting to know that you may be entitled to various forms of financial assistance through the government. There are a number of different methods of assistance available to support parents with costs of raising a child, such as:

• Parenting Payment
• Paid parental leave
• Family Tax Benefit
• Child Care Benefit
• Child Care Rebate

4. Consider getting your life insured

When you become a parent you become responsible for the welfare of your children. This is why it’s sensible to think about how your partner and young child would cope if you were to pass away suddenly. It’s not a very pleasant thing to think about, but the sad fact is it does happen.

If you have life insurance, this money could be used to pay for a nanny so your partner could continue working, or it could be put away to fund your child’s future education expenses.

5. Consider making a will

Once you start a family, a will may be a good idea to make sure that your children are looked after in accordance with your wishes if you pass away unexpectedly. You should also review your death benefit nominations on any superannuation accounts and