Your 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.
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