Starting a family and settling down is a life goal for a lot of Australians. Making the decision to bring a new life into the world can be daunting, especially from a financial perspective. A 2016 study suggests that raising a child to the age of 17 costs the average Australian family more than $297,600!
Starting off your family life in the right financial direction is imperative, though it might seem like a tall order. Thankfully, budgeting and preparing financially is a relatively simple process, and is pretty easy if you get started sooner rather than later. The trick, as always, is to plan, set goals, and take advantage of these great tips!
The number one mistake that new families make when starting out financially is failing to budget. With just two members of a household, each with a good understanding of their own personal finances, it is sometimes possible to get by just on ‘gut-feeling’. However, throw another hungry mouth into the mix, as well as a few sleepless nights and maybe some unexpected expenses, and even the most naturally financially-savvy people can quickly be left stranded.
If this is your first budget, you need to learn to crawl before you can walk (excuse the pun). Start off with just the simplest budgetary framework – dividing your expenses into three columns:
Once you’ve figured out where your money is going, it’s a good time to allocate a little bit of extra money for your financial security. Starting a seperate (untouched) savings account is a quick and easy way to get started with this. This account will prove invaluable for the ‘startup’ costs associated with having a kid – accessories, hospital bills and other costs can quickly add up!
With a budget in place, you can start getting ready for the big day. Fitting out and baby proofing your home can be expensive, so it’s a good idea to introduce these costs relatively slowly. Including ‘baby preparations’ as a variable essential expense is a good idea – even if it means cheaping out a bit when it comes to other discretionary expenses. Don’t worry though, as there are plenty of ways to have fun on the cheap!
A good place to start with your preparations is putting together a ‘hospital bag’ full of the essential items you’ll need when push comes to PUSHHHHH!
A typical hospital bag will contain items like:
Another important item to bring is an infant car seat – getting home without one will prove rather difficult!
There are a lot of costs involved in having a baby: clothes, food, bedding and other equipment such as strollers, car seats and change tables.
In order to save money, prudent parents often choose to buy used and second hand baby accessories. Garage sales and second hand stores are a great place to start, as well as online options like Gumtree, Ebay and even Facebook marketplaces.
One of the best sources of cheap (or hopefully, free!) baby necessities is your social and family network – you never know what gems people have stored away in their garages, and it never hurts to ask.
If you absolutely have to buy first-hand baby goods, it’s important to shop around – check out these simple tips on how to take advantage of seasonal sales to get the best price possible.
In addition to these material costs, hospital costs can be surprisingly expensive, even in public hospitals. While some doctor’s bills, medical imaging, testing and birthing classes might be covered under Medicare, this isn’t always the case. Be sure to check beforehand with the relevant authority, or you might be slapped with unexpected bills – and nobody needs that.
Finally, one of the most overlooked costs in having a child is the need to take time off work. Especially for casual or self-employed parents, this can often be a very stressful time. Make sure to take this factor into account in your budget for both parents.
Exhaustion and stress can make the first few months of parenthood very difficult, so be sure to try and give yourself some financial leeway in the case that everything doesn’t go according to plan.
Once your baby is home, things will be a little simpler. A lot of new parents find that expenses actually diminish initially – there’s just no time to spend money.
Once this initial period ends, it’s important to focus on long term goals, as you would during any other period of your financial life. Focus on reducing discretionary expenses (though you don’t need to be boring!) and saving money for a rainy day.
Ultimately, while saving money with newborn children might be difficult, it isn’t impossible if you plan accordingly. But don’t stress too hard, as budgeting and saving is dead simple. With the right attitude, your wallet can be just as healthy as your beautiful new baby!
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