Is the stork delivering a bundle of joy to your household this year? Planning for a new baby is no easy task and for someone so small, they have a tendency to attract a large cost. For many new parents, the excitement of preparing for a new arrival can overshadow the uncomfortable financial truths associated with having a baby.
From taking time off work to purchasing essential nursery items, doctor visits, scans, a pram, the list goes on. The truth is, having a baby does not come cheap and according to some studies, the first year of a baby’s life can cost in excess of $10,000. If you want to be financially savvy in the early years of parenthood, you may need to ask yourself some hard questions. Although you may have your heart set on that new Bugaboo Fox Pram and Stokki Sleepi Cot, can you afford the hefty price tag attached to them?
When it comes to financially planning for your baby, budgeting can help. Sitting down with an impartial professional can help you to analyse where you are really spending your money and what changes you can make moving forward to make the transition a little more transparent and organised. Although there is never usually a perfect time to have a baby, taking practical steps before your baby arrives can help ease the financial burden later.
Our team have put pen to paper to highlight some key spending areas sometimes overlooked when planning and some practical tips to consider.
- Doctor and hospital expenses
Do you have private health insurance? Do you know exactly what is and is not covered by your fund and by Medicare? It is difficult to know what to expect when it comes to medical expenses and having a baby, especially if it is your first time around the baby block. If you are assuming that everything will be covered by your private health fund, you may feel the financial sting when you are prompted to pay the gap at your appointments. When it comes to your medical expenses, consider the following in advance:
- Talk to your private health fund and confirm your coverage. Typically, you will need pregnancy and birth coverage for 12 months before your due date to be eligible to claim. If you do not meet the requirements, your hospital stay and other costs may not be covered.
- If you are engaging an Obstetrician to deliver your baby, ask them upfront about their fees. Generally, you will pay a fee for regular check-ups and a fee for them to deliver your baby, and these attract out-of-pocket expenses.
- You will typically have a number of scans at set intervals during pregnancy. These are usually not claimable through private health and you receive only a portion back through Medicare.
- Talk to your Obstetrician about what services you may need post-delivery and confirm with your health fund what is and is not covered. Often, out-of-pocket expenses apply to anesthetist services, pharmacy, pathology and pediatrician visits.
- Maternity and paternity leave
Most expecting parents know that they are entitled to paid parental leave cover through the Government’s Paid Parental Leave Scheme. Pending eligibility, you may receive 12 weeks at the minimum wage while taking time away from work to care for your new baby. Partners may also be eligible to take paid leave for two weeks as part of the Dad and Partner Pay initiative. When completing the paperwork for Government payments, it pays to be organised and lodge as soon as practically possible.
When your baby arrives, you will need to provide proof of birth before payments make their way into your account, so it is worthwhile confirming the requirements with the Department of Human Services in advance to ensure you know what to expect and are not left financially stretched.
If you are planning to access care for your child, you will need to be up-to-date with the new Childcare Subsidy. Due to come into effect from 1 July 2018, it will combine the existing Childcare Benefit and Childcare Rebate into a single payment. The new payment is calculated using a variety of factors including, income, residency and immunisation requirements, care duration and work commitments.
Do your homework in advance and calculate your out-of-pocket expenses so you know what to expect. When it comes to childcare fees, the daily fee can range from as little as $70 all the way to $190 in highly sought after city areas.
- Nappies and formula
Disposable nappies and formula attract an ongoing cost, so make sure when you’re creating your weekly budget after your baby is born, that you factor in these costs if you need to.
With disposable nappies, it can help to stock up in the months leading up to birth to reduce the impact on your grocery bill later and to consider cheaper brands. Take advantage of specials and ensure you consider how many you may need of each size to avoid being left with an unusable supply as your baby grows.
- Clothing and baby goods
When buying clothes for your baby, consider what size they will likely be using in the various months. If your baby is born in December, you will likely need a seasonal wardrobe for the warmer months in sizes 0000 and 000, and clothing suitable for cooler weather in sizes 00, 0 and 1. Avoid spending surplus funds on items that may never be worn by having a considered approach.
If you live in a climate where the weather fluctuates, apply this logic to your planning. Being organised can also help to avoid the need to buy items off-season, which can attract a higher cost.
When investing in baby goods, especially expensive products investigate the likelihood of needing them, talk to friends with babies for advice and for general items such as carriers and swings, borrow them first to see if you baby enjoys them. Every parent and baby is different, some prefer using certain items and others don’t. To avoid purchasing an item you may not need or that your baby doesn’t enjoy, take practical avenues where possible before putting your cash or credit card down.
Are you an expecting or new parent? Would you like practical help with budgeting and managing expenses? Contact our team on (07) 4632 1966 for a free consultation.
GENERAL ADVICE WARNING | This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives and needs. When making any financial decisions, you should seek advice from a specialist advisor beforehand.