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Get your finances ready to start a family

06 February 2017

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

Preparing for parenthood is an exciting time, but don't let the cots and cuddly toys distract you. Your finances (and everything else) are about to change in a big way, so use these pre-baby days to plan ahead. Here are the key financial tasks to tick off before, and after, baby arrives.

Before the baby:

1. Understand your health insurance

Before you even start trying to conceive, check your existing health cover to see if it includes pregnancy and obstetrics-related services. This is useful if you want to have your baby in a private hospital, with your choice of obstetrician, or you want to utilise any reproductive services like IVF. A 12-month waiting period typically applies with most insurers, so make changes well in advance.

2. Look into your leave entitlements

The amount of time you and your partner can take off work, and your income during that time, is a huge consideration. Research your company’s leave policies and Australia’s parental leave laws. If you’re entitled to maternity/paternity leave, there are lots of different ways you can use it.

Catherine Stafford*, a senior lawyer living in Sydney, chose to share that first year of care with her husband Greg*. When their son was born in 2014, Catherine took eight months’ maternity leave from her employer at half-pay, then transferred her Government parental leave pay to Greg so he could stay home with their son for the following 18 weeks. Between them, Catherine and Greg managed to share the care throughout that first year, and still maintain a reasonable income. We felt strongly about sharing care equally, says Catherine. Also I earn significantly more than my husband, so it made financial sense. It was really lovely to see my husband develop such a strong bond with our son – the kind of bond that only comes from being the single person the child relies upon for all their needs.

3. Check if you’re eligible for government payments

Once your baby is born, you might be eligible for one or more government payments, such as parental leave pay or the family tax benefit. Look into this before your baby arrives, as you can start the claims process as early as three months before your due date.

4. Plan for childcare

The need for childcare might seem a long way off, but it’s worth starting your research early. Not only is it easier to do it now (without a baby in tow), but many child care services have long waiting lists. Think about what you’re after: maybe it’s long day care, occasional care, family care or a nanny. Each has varying costs. The government’s My Child website can help you sort through your options.

5. Create a realistic budget

Put together a simple budget so you can get an accurate picture of what’s to come. Consider changes to your income, as well as all the inevitable pre-birth expenses, like medical costs and fitting out the nursery. There are also the recurring post-delivery expenses to keep in mind, such as nappies, food and hefty child care costs.

After the birth:

1. Adjust your health insurance

Health funds have different rules about the time limits for adding your child to your insurance, so check with your fund to ensure your child is covered as soon as possible.

2. Write your will

Probably not top of mind in those hectic early days of parenthood, but writing, or adjusting your will is a crucial step in securing your child’s future. In your will you can designate a guardian to care for your children if anything should happen to you. You can also appoint a trustee to manage your money for your children until they come of age.

3. Open up a bank account for your child

According to the most recent NATSEM report in 2012, it will cost the average Australian family an eye-popping $812,000 to raise two children from birth to adulthood. Michael Caarns*, a producer living in Sydney with his two children, aged five and two, says having separate bank accounts for the kids has made it easier to set money aside. Every birthday and Christmas I deposit money into the children’s accounts. We’re not talking huge sums, but I can see how over the years that money is really going to help pay for their education.

With a bit of forward thinking now, you can build a more secure financial future for your family.

*The names in this article have been changed for privacy purposes.

Planning for parenthood is an exciting time. Learn how a financial planner can work with you to develop a financial plan for you and your family’s future here.