Understanding the Financial Impact of Having a Baby

Maternity Care

Tammy George

There’s no denying that kids are expensive. Even before they arrive, babies can cost a small fortune. When it comes to finances, there is never the perfect time to have a baby, but if you spend some time planning your finances, you can reduce the stress. First-time parents can be overwhelmed trying to understand what employer and government benefits they are entitled.

The Costs

Costs can add up quickly. By the time baby arrives, you may have already spent thousands of dollars on the nursery set up and medical expenses. The medical costs can include an obstetrician, scans, the delivery and hospital charges. For some women, they may have incurred significant costs using IVF to fall pregnant.

After baby arrives, your living expenses will change. Factor in the additional costs of nappies, clothing, formula and baby equipment to gain an idea of what your new cost of living will be.   

Work out your Future Income

Sit down and work out what your income will be in the first 12 months after your baby arrives. If you are in a relationship, decide who will be the main caregiver and how long you think they will stay with the baby before returning to work or not.

If you are not in a relationship, decide how much time you can afford to have off before returning to work. Some finances are complicated, so you may need a spreadsheet to know what income you can expect and when.

You and your partner may be eligible for some of the following payments:

  • Annual and/or long service leave paid out by employer
  • Paid maternity leave from employer
  • Paid paternity leave from employer
  • Parental Leave Pay from government
  • Dad and Partner Pay from government
  • Parenting Payment from government
  • Family Tax Benefit
  • Childcare Subsidy

For more information about government benefits, see the Australian Government Department of Human Services website. The site has a handy payment finder to see what you are eligible for.

Set up a Budget

To make sure your money lasts as long as your maternity leave set up a budget. You will need to keep track of what you are spending, so there are no nasty surprises with unexpected bills. If it looks like your finances are going to be tight, investigate your options for reducing your housing costs. Some banks will allow you to hold off making repayments on the mortgage for several months after the birth of a baby. If you live in a property with high rent, try renegotiating or moving to a cheaper property.   

Practice Living on One Income

If you are in a relationship and you intend taking unpaid maternity leave or giving up work to stay at home with your child, you should start living on one income well before your baby arrives.

It is a good test to make sure you can change your spending habits to account for the reduced income. Use the second income to put money aside in a separate account for emergencies or make additional repayments on your mortgage. You may decide to draw down on these funds later to help with living costs or extend the amount of time you have off work.   

It’s far better to be organised and know your financial situation now and in the future. Don’t leave it until you are in financial stress as you will have fewer options available. When your baby arrives you will be able to enjoy your time off work free of financial worries.

Tammy George

Please note: Tammy's blog is general advice only. For further information on this topic please consult your healthcare professional.

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