Having kids is expensive. In fact, the weekly cost of having just one child in Australia is estimated to be $263.
There are lots of costs to consider — and one of the big ones is maternity leave. How much money will you need to set aside to pay your bills and cover expenses while your partner is away from work?
During this time your income will be reduced by half, but your expenses will stay the same (and maybe even increase). If you don’t plan ahead and take the right steps to ensure you’re ready, this could be a real stretch financially.
In this article, we’ll take a look at some of the things to consider when saving for a baby, and how to make sure you save enough.
Things to Consider When Saving for a Baby
The amount of money you should aim to save when planning for a child depends on multiple factors. Here are some things to think about before making any spending plans.
- How much money does your partner earn? Assuming they will be at work while you stay at home, this will be the sole income for your family during your time off. Any shortfall between this and your expenses will need to be covered by savings.
- Who earns more? If the higher earner is taking leave, you’ll have to save more than if it was the other way around.
- How much time off do you want? It’s natural to want to spend as much time with your newborn as possible, but even an extra few weeks can make a big difference financially. Decide ahead of time how long you will want to be off work so you can plan accordingly.
What Will You Need for the Baby?
On top of your usual living expenses, you’ll also need to consider baby-related expenses, which can run pretty high if you aren’t careful.
Some example of these expenses are:
- Baby capsule
- Baby monitor
Take some time to plan out all the things you’ll need to buy and factor this into your budget. Remember that there will almost certainly be a few expenses you overlook, so make sure there is a buffer for surprise outlays.
Baby-related costs will extend far beyond the birth. One cost you’ll need to consider is childcare. If both you and your partner have to return to work, you’ll need to find someone to look after your child — and this often doesn’t come cheap.
The average cost of childcare in Australia, before subsidies, is estimated to be $106.39 each day. This is a major cost you should consider if you’ll be returning to work while your child still needs full-time care.
How Much Will You Need to Save?
Once you’ve added all your possible expenses to the amount you typically need to live, minus your partner’s income, you should have a rough figure to aim for.
There’s a lot of variation between families here, but often the number can be quite high. If you’re aiming to take the maximum time off work you might need to save between $20-30,000.
Next, you need to work out how much you can realistically save. These numbers may not match up ($20,000 in nine months is over $500 per week), in which case you’ll have to adjust how much time off you can take or cut back on some expenses.
With a good spending plan and careful preparation, however, it should be possible for most couples to hit their goal.
Start Way in Advance
From the moment you become pregnant, the clock is ticking. If you wait until this point to start saving, you’ll have at most 9 months to hit your savings goal, and this time can pass quickly.
It’s best to start saving as soon as you decide to have a baby, so you can maximise your time and have as much as possible by the time baby arrives.
Consider the Costs of Things like Fertility Treatments
1 in 20 babies in Australia is born with the help of fertility treatments. Although we would all prefer to conceive naturally, sometimes this isn’t possible. That means we need to prepare financially for the fact that fertility treatments may be necessary.
This is something you may have to factor into your savings plans, as these treatments can be expensive — one IVF cycle can cost anywhere between $9,000 and $15,000.
If you have a good amount saved for your new baby in general, you can use this for fertility treatments and then work with us to replenish your savings later.
On the other hand, if you manage to conceive easier than you planned you can take the money saved for fertility treatment and put it towards your overall baby saving goal.
Putting together an effective Spending Plan can put you in a much better position for when your new family member arrives. At Premier Spending Planners, we can help you put together a plan that allows you to save enough money to cover all your baby-related costs in an effective and stress-free way.
We’ve done this with countless clients over the years, and we’d love to do the same with you. To find out more, book a free call.
Get Started with a Spending Plan Today so You Can Afford A Baby!