Budgeting for Baby

Tips for parents to be

Congratulations! You have just found out that you are pregnant. Sorting your finances for the next few months is just as important as booking in to a hospital for the big event.

MoneySmart is the Australian Securities and Investment Commission’s (ASIC) personal finance website aimed at helping Australians gain a better understanding of money and finances so they can make more confident and informed decisions.  The website provides every day Australians with tips and tools to help them with the ups and downs of financial life.

Here are MoneySmart’s new tips for parents to be:

1.       Reduce credit debt before the baby arrives

Use MoneySmart’s credit card calculator to see how much extra you need to repay each month to pay off your card faster. It is also a useful way to see how much interest you will save by paying off your card faster.

2.       Start saving

While you are still on a dual income, start saving 10% of you and your partner’s salaries for initial short term costs such as the pram, nursery furniture, car seat, clothes and health care costs. Use MoneySmart’s savings goals calculator to plan in advance and estimate how long it will take you to save the money.

3.       Budget for life with baby

Use MoneySmart’s budget planner to create two budgets, one for now and one for when your baby comes. This will enable you to plan for expenses before and after the baby.

4.       Work out your maternity leave

People take varying degrees of time away from work on maternity leave .Research shows the majority of new mums return to work between 12-18months after having a baby.[1] Since most maternity leave is unpaid, it is important to factor in to your budget how you will pay your rent or mortgage and other living costs such as utilities during the 12-18months.  Especially if you have been used to paying these on a dual income. See MoneySmart’s tips on maternity leave on our ‘Having a baby’ page.

5.       Planning childcare

If you’re going to need childcare, ask your local family and friends about childcare options in your neighbourhood. To find a childcare centre near you, visit mychild.gov.au. You can also work out your childcare costs with the government’s childcare estimator.

Planning financially for this huge change in your life can give you the confidence to embrace this new life stage.  The MoneySmart Team wishes you all the best in this new and exciting chapter.

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[1] “Paid Parental Leave: Support for Parents with Newborn Children”, Australian Productivity Commission, February 2009, p 131 sourced from http://www.pc.gov.au/__data/assets/pdf_file/0003/86232/parental-support.pdf. The report shows unpaid maternity leave makes up the majority of leave taken (average 34 weeks). Of mothers in paid work prior to childbirth, 11% return to paid work within first 3 months of childbirth, 26% within six months, 57% within 12 months and 74% within 18months.