Preparing for a baby is one of the biggest events of your life bringing with it a lot of expense. When you combine the extra costs with the likelihood that your income is likely to drop from two incomes to one, having a baby can put a large strain on the household budget. Here are some tips to help you prepare for your new addition.

Baby Budgeting

Tips for Preparing Financially for Baby

> Second Hand Baby Items: As much as it’s tempting to buy all new furniture and supplies for your baby, there are many items that you can buy second hand or borrow from friends. Essential items like car seats, prams, baby monitors and cots can add up to thousands so you can save a lot of money by not buying these brand new.

> Private vs Public Hospital: The big decision about whether to have your baby in a private or public hospital can make a huge difference to your expenses. If you choose the public system most of the costs associated with the birth will be covered by Medicare. But if you choose a private obstetrician in a private hospital, you should expect this to cost you around $5000, even if you have private health insurance. Remember that changes to the Medicare Safety Net in January 2010 have drastically reduced the amount that Medicare will contribute to obstetric costs so this means up to 80% of these costs will be out-of-pocket expenses.

> Mortgage Repayments After Birth: Keeping up with your mortgage repayments can be challenging after having a baby. Many lenders offer a payment variation where you can reduce your repayment amount temporarily whilst on parental leave. Remember though that this will extend the length of your mortgage and other fees and charges may apply.

> Baby Bonus & Paid Parental Leave: Some people are eligible for financial assistance from the Australian Government. This includes the Baby Bonus and Paid Parental Leave. New parents who are eligible for these payments can only choose one of these per child (you cannot receive Parental Leave and the Baby Bonus for the same child).

> Toy Swap or Hire: Small children can get bored of their toys very quickly. To save money on buying lots of new toys it can be cheaper to hire them or swap toys with other new parents. Check your local paper or parent group for information on toy swaps.

> Cheap and Cheerful Baby Clothes: With so many beautiful designer baby clothes it’s easy to understand many new parents wanting to splurge on cute outfits for their baby. Remember though that babies grow so fast and may only fit in those outfits for a short time. Try to stick to cheaper basics instead of the latest designer labels. Your baby won’t notice the difference but your wallet will!

> Protect Your Family with Life Insurance & Wills: Though this isn’t a money-saving tip, a very important part of preparing for your new baby is to ensure that you review your life insurances and update your will. Don’t put it off. By making sure that your child will be protected could the unexpected happen, you can feel happy knowing that they will be taken care of. If you already have Income Protection in place before baby comes along, check if your insurance provider has a Pregnancy Premium Waiver option where you can get a break from paying your life insurance premium whilst on maternity leave and still maintain your cover.

More Tips on Budgeting for Baby
For more information and tips on how to prepare financially for your new arrival including the Baby Budget Planner Worksheet, download our free Ebook Financial Planning for Baby available on our website.

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2 Responses to “Budgeting for Baby”

  1. Mary May 9, 2011 at 3:47 pm #

    Thanks for this article. Some helpful tips.

  2. Tough Biz May 24, 2011 at 3:48 pm #

    Thank you so much for the useful tips. There is so much to learn and it’s great to have a resource like you to turn to for information!