Budgeting for parenthood
Starting a family is a time in life that’s both exciting and challenging, and you need to consider how financially prepared you are to manage the increase in your expenses. It’s wise to start getting your finances in order as early as possible so that you can relax and enjoy your new family. You’ll also need to plan for the future and look at other important issues that will impact on your finances, such as education expenses and insurances.
First of all, review your current financial situation and itemise your income and expenses. Factor in any increased expenses for your new baby such as childcare and any government assistance you might receive. Use a budget planner to help you.
Eligible mothers can receive a Baby Bonus through Centrelink. Visit www.centrelink.gov.au for more information.
You may also be eligible for the government’s paid parental leave scheme. This means you could receive parental leave pay on top of any paid and unpaid leave from your employer. Visit www.familyassist.gov.au to see if you meet the eligibility criteria.
Remember that the Baby Bonus and parental leave can’t be paid for the same child, so you’ll need to decide which type of assistance best meets your needs.
There are also other things to consider that will affect your family’s financial situation.
- Superannuation: Find out what options are available to keep contributions going if you’re not working. Contact your super fund or visit www.ato.gov.au.
- Insurance: Make sure you have sufficient health, life and home and contents insurance cover for your growing family and assets.
- Will: It’s important to consider who will be your child’s guardian if you or your partner should die. A Will ensures that your wishes are legally documented and carried out after your death.
Helpful baby sites:
Saving for education
You’ll face many expenses when your child is growing up, but education is likely to be one of the biggest. Here are a few tips to help you save for your child’s education.
- Work out a budget: Will you be sending your child to a private or public school? Make sure you research the school’s website or course handbook carefully so that you fully understand all the costs involved. Private schools vary greatly in the fees that they charge.
- Factor in other expenses: It’s also important to add in other expenses such as stationery, uniforms, computers, sporting equipment, excursions and camps.
- Use a savings and budget planner: Develop a savings plan that covers all possible expenses, making sure that you allow for inflation and price rises.
- Start saving early: Set up an account for your child that’s only for education. There are lots of savings accounts on the market that offer bonus interest if you make a deposit and no withdrawals each month.
Saving and payment options
There are different ways that you can save for your children’s education, including term deposits, managed funds and shares.
Your child may be eligible for HELP during their studies. This is a government loan for tertiary students that defers payment of university fees. You’ll still need to cover costs for things like books, materials and transport. For more information about university fees, visit www.goingtouni.gov.au/.
Many financial institutions also offer student loans. A student loan is a personal loan designed to assist tertiary students with their financial needs. The loan terms vary but are usually between 12 months and seven years, depending on the financial institution. Interest rates and loan conditions can also vary between different credit providers, so it’s definitely worth comparing loans.
A qualified financial adviser can help you identify your goals and develop a clear financial plan. For more information about the ins and outs of financial advice, visit www.moneysmart.gov.au/investing/financial-advice.
Share your experiences
Have you recently become a parent? Let us know about what worked for you financially – we’d love to hear from you.