Your Family Your Money eight-month baby financial plan
Analaura Luna Having a baby is exciting, but sometimes working out how you’re going
to deal with the extra expense and loss of one income is daunting. This
Plan is just what you need to ensure that you can enjoy your new baby
without worrying about your finances.
Month 1: Boost your income
Increasing your income is the name of the game right now. Can your
partner pick up some extra overtime or negotiate a pay rise? Can you
take on freelance or contract work or hop on Ebay to sell some of the
possessions that you don’t need anymore?
You also need to research your maternity leave options so that you know
your rights and responsibilities in regard to leave and pay before
letting your boss know you’re expecting – that way you won’t have any
unexpected surprises when the time comes to break the news.
Month 2: Get budgeting!
A drop in income and an increase in expenses mean you need a new budget!
Divide your family income into your partner’s ‘everyday’ income (to
covers household expenses) and your ‘baby’ income (to cover baby-related
expenses).
We’re going to split these costs into three sections – let’s take a look
at each of them:
Medical Expenses – at the very least you’re
going to need an obstetrician, a couple of ultrasounds and a maternity
ward. If you use the public system your medical costs can be as low as a
few hundred dollars; if you choose to go private, it could cost you a
few thousand. Whichever option you choose, make sure your budget can
cover these added expenses.
Initial Baby Costs – the basic things your
baby needs to begin with are a bed, pram, car seat, clothes, nappies,
bedding and a bath. At a discount department store you’ll get the
majority of these items for around the $1 500 mark; if you go ‘boutique’
you’ll pay a lot more. But if you can borrow and Ebay the majority of
your baby items you could get everything you need for half the cost –
just ensure that everything you get complies with Australian safety
standards.
Ongoing Baby Expenses – nappies, wipes, clothes, formula, baby
shampoo … the list is endless and the costs for these ‘consumables’
really add up. Disposables and formula will cost around $30-40 a week
and while using cloth nappies and breastfeeding is cheaper, you still
need to factor an additional amount into your budget for added extras
like wipes and Napisan.
Month 3: Set up your ‘Emergency Fund’
One of the most important things you need right now is a contingency
plan that will allow you to survive financially if our plans take an
unexpected turn. Your emergency fund should cover at least three months’
worth of living expenses, so calculate how much you’d need to set aside
each week to accumulate this amount and direct debit it from your
‘baby’ income into an online savings account.
Month 4: Eliminate toxic debt
One income plus high-interest debt equals a lot of stress. Now’s the
time to use some of your ‘baby’ income to make extra payments on your
debts to try to extinguish them before baby arrives. Tackle the highest
interest ones first, making additional repayments until you clear the
debt and work your way through them all until you’re debt free.
Month 5: Fill in the gaps
If you found gaps between your income and expenses while you were
working on your budget, one of your best options is to go back and
review your living expenses, streamlining them wherever you can.
Take a look at refinancing your mortgage or reducing your repayments for
a while. Take a look at www.canstar.com.au
to compare home loan products or chat with your mortgage broker about
your refinancing options. Getting a better home loan can save you tens
of thousands of dollars – literally.
Next, look at your utilities – research new plans or negotiate cheaper
ones with your current providers. A new plan can save you hundreds of
dollars each month and knowing how to use it properly can save you even
more!
Month 6: Let the government help
Once baby arrives you may be entitled to the Baby Bonus and ongoing
government assistance – to find out whether you qualify, contact The
Family Assistance Office on 13 61 50 or take a look at the easy-to-read
information sheets that will answer most of your questions on the
website – www.familyassist.gov.au.
Month 7: Think about your super
Most women tend to stop investing in their superannuation while they
stay at home looking after children, resulting in serious long-term
effects and the potential loss of thousands of dollars in interest. Have
a chat with your financial adviser about whether making personal super
contributions (that may qualify you for the government co-contribution)
or having your partner make a spousal contribution to your super would
be a good option in your circumstances.
Month 8: Let’s go shopping!
By now you should have a good idea of just how much ‘stuff’ your baby
will need, and hopefully you’ve had a chance to borrow some pre-loved
items, especially the things that baby only needs for a couple of
months, such as the baby capsule and bassinet. You’ll find that most
parents are more than happy to pass their baby goods around on the
provision that you take good care of them and pass them back when you’re
finished with them.
With four weeks to go it’s finally time to go baby shopping and put the
finishing touches on your baby’s nursery. You’ve put a lot of effort
into getting to this point, so take some time to enjoy this little
pleasure in life.
If you liked this article
you might
also be interested in these other articles about parenting, kids and money:
Things you really need to know when you're having a baby
Working out what's best for your family
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