Having a baby is a joyous event to be celebrated. However, it may be overshadowed by the increasing cost of living, interest rate rises, or uncertainty of rental increases. So Elson Goh, from EG Financial Services, explained what to expect (financially) when you are expecting.

The Statistics

Having a baby is not cheap. According to a recent study, more than half of Australian families underestimate the cost of having a child. And there are hidden costs like kids growing out of clothes and footwear, lost income, extracurricular activities, the urge to spoil their kids, baby showers and gender reveal parties.

Men are from Mars and Women are still on Earth

Elson was chatting with a couple who were expecting and asked the husband what his plan was. “He said to me, we’ll be fine. I’ll take five days of leave and help with nappies before I go to bed.”

Then he asked the wife. “She rambled off things like loss of income, cost of nappies, breastfeeding or formula, cost of formula, will the baby settle, her parents need to come and help, prepare the room for parents to stay over, meals for family and parents, what about the in-laws, what if they want to come and help as well, there are not enough rooms…we need a new house.”

Just from the quick conversation, he could see the mindset and the thinking between men and women were very different. And when you’re put in a high-stress situation where money is concerned, that’s where a lot of tension comes into the family. So it is important to have a conversation and have expectations set. 

How much to budget for

An Australian government study shows that the weekly cost of raising a child is between $140 to $170. But some easy numbers to remember are 4 for 4 and 8 till 8Four thousand for the first four years should be budgeted and eight thousand until your child is eight. “I think it sets out as the bass line or your minimum amount. that you should be thinking about and budgeting for.”

Do I need private health insurance?

If you can afford to get some form of private health insurance. It will set you back $40-$60 a week but will provide a safety net for some of the surprises that you may have. “However, as a dad with two kids, I can say that the Australian Medical System is very good and advanced. And you do get a lot of services and care through it.”

Has paid parental leave changed?

I often encourage people to approach their employers and find out what kind of entitlements they can have when it comes to maternity and paternity leave. Some employers are catching up in terms of providing free days and additional leaves.

Paid parental leave has changed to 100 days split between the two. It is a lot more flexible but you will only be paid minimum wage which is about $176 a day. “I often encourage people to approach the employer and find out what kind of entitlements they can have when it comes to maternity and paternity leave. Some of the employers are catching up in terms of providing free days and additional leaves.”

Final Tips

  1. Have a budget, and use your offset account wisely
  2. Save with second-hand items
  3. Seek help and join a support group
  4. Be aware of provisions like childcare subsidy
  5. Avoid thinking too far ahead (for example education, scholarships or investment bonds)
  6. Get personal insurance, especially income protection

Listen to Elson’s full chat with Leah below.