Every year in Australia, almost 300,000 babies are born – more than 800 a day, the ABS says. That's a lot of nappies, baby food, toys and furniture that parents have to plan a budget for. To make it harder, the cost of having a child has risen by 50 per cent since 2007, according to the University of Canberra.
There's a lot more that goes into a family budget than some realise. From insurance to super, saving accounts to home loans, what is the impact of bringing a new life into this world, and how can you plan ahead financially?
Here's a quick guide to getting ready:
The cost of having a child has risen by 50 per cent since 2007.
Fix as many payments as you can
Your monthly outgoings can be split into two types – those you pay a set amount on (like rent) and those that are more up and down (groceries).
Before you have a child, it might be a good idea to set as many of your payments as possible. Taking out a fixed-term home or investment loan, for instance, makes budgeting that little bit easier.
Of course, there are benefits of a variable mortgage too, though fixing might be a safer option given the impact a child can have on your pay packet.
Reduce that credit card debt
Before your new arrival pops out, spare a thought for your credit card debt. This will be a big black hole of money that could be better spent elsewhere.
Actively try and reduce it before having a baby and you might be in a much stronger financial position, and your budget will likely thank you for it. It's also a good time to switch to a low-interest credit card to help you avoid debt in the future.
Start saving!
The nine months of pregnancy can be a great time to prepare and put some extra savings under your belt. There are a few ways of doing this:9
- Open a separate savings account – preferably with an attractive rate of interest – for baby savings
- Use a redraw facility with your mortgage to put more money away, while reducing the interest-eligible amount on your home loan
- For couples, try living off one person's wage to give you plenty of money when junior arrives
Open a child's bank account
On top of teaching your children sound saving habits once they get a bit older, a kid's bank account is a good way to squirrel away money and give them a leg up later in life – should you get the most out of one, that is. Start this as early as possible to maximise your savings.
By using the services of a customer-owned banking organisation, you also know that your money is being reinvested into you and your child's future. Call CAPE if you'd like help getting your nest egg ready for a new arrival.
