Having a baby is a wonderful and exciting occasion, but is does require a lot of pre-planning and preparation. One area that you especially need to plan ahead for is your finances. Adding a baby to the household will increase you overall expenses and may reduce your income for a limited time, if you anticipate taking any time off of work.
With proper planning, however, you will be able to manage your finances with a new addition to the family. Here are some tip to help you handle your finances when having a baby.
Create a Budget
The first step to taking care of your finances is to set a budget for your household. If you have never had a budget before, the best way to start one is to track your income and expenses for at least two weeks but the larger amount of time you track the better. This will help to give you an idea of how much money you spend in different categories, such as rent, utilities, food, clothing, medication, transport costs, entertainment, and other expenses. Using this information, you can create a budget that meets your families need.
Now that you know what your household is currently spending in different areas, you will need to adjust this budget to reflect the additional expense of having a baby. You will also need to take into consideration any loss wages from time off work to stay home with the baby. Here are some expenses you can expect to incur before and after having a baby.
- Setting up the Nursery. You will need to purchase some necessary supplies for your nursery, such as a crib, bedding, and dresser. If you are looking to save money, try to purchase some of these items at a second-hand store or borrow them from a friend or family member.
- Baby Supplies. You will also need to purchase a regular supply of baby supplies, including nappies, clothes, and food. Take all of these extra expenses into account when creating a new adjusted budget.
- Child Care. One of the biggest expenses you may incur is the cost of childcare for while you are at work. You have several options for providing child care for you baby. You can have a friend or family member watch your children, hire a nanny to watch your baby at your home, or send your child to a child care centre. You may be eligible for help with your childcare expenses through one of the following programs.
- Child Care Benefit. This benefit helps to cover part of the weekly expenses for child care services while you are working.
- Child Care Rebate. This rebate refunds you as much as 50 per cent of the out-of-pocket child care expenses you paid.
In addition to child care benefits, there are many other sources of help available to families having a new baby. Below is a look at some help that may be available to you after having a baby.
- Pay from Employer. You should check with your employer and see if you are eligible for maternity, recreation, annual leave, or any other entitlements while you are off work. Find out how much pay this would be and for how long you can expect to receive payments.
- Parental Leave Pay. This benefit will provide up to 18 weeks of pay for parents who choose to stay home with their baby for the first few weeks. The money can be used to offset household expenses, and you may be eligible for this pay on top of pay from your employer.
- Baby Bonus. This benefit offers a one-time bonus of up to $5,000 depending on your specific set of circumstances. The Baby Bonus cannot be claimed in addition to the Parental Leave Pay. A Centrelink worker will help to determine which benefit is right for you.
- Dad and Partner Pay. Dads or partners are now eligible for up to two weeks of pay if they choose to stay home with the baby for a few weeks. Dad or partners have one full year to claim this benefit.
- Family Tax Benefit. You may be eligible for the Family Tax Benefit after having your baby. This benefit can be claimed when filing your year-end taxes.
- Parenting Payments. This benefit offers income support to those families who have a baby and meet certain income requirements. It provides regular Centrelink payments that can be used to offset the additional expenses of raising a baby.
Securing Your Family
If you are having a baby, it is a good time to make sure that all your finances and financial documents are in place. Here are some things you should consider before having your baby.
- Superannuate Payments. In order to keep your superannuate up-to-date, you should continue to make payments to your super during your time off from work. Your spouse can make these payments for you through his regular pay. You may also be eligible for governmental co-contributions that will help match some of your payments.
- Income Protection. Now may be a good time to consider investing in Income Protection insurance. This will help cover your loss of wages if you ever face an emergency situation.
- Life Insurance. If you do not already have a life insurance policy, now is the time to get one. This will help to protect your family in the event that something were to happen to you.
- Will and Estate Planning. If you already have a will in place, you will need to make the necessary changes to provide for your child. If you do not have a will in place, you need complete one. This will protect your child in the event of your death.