CAN WE AF­FORD A BABY?

If the nurs­ery is or­gan­ised but your bud­get is a sham­bles, you may need to turn your at­ten­tion to that bot­tom line

Pregnancy Life & Style - - CONTENTS -

Smart and savvy tips for bud­get­ing for bub

For most of us, the last thing on our minds as we spread the preg­nancy news is how much hav­ing a baby is go­ing to cost. Ac­cord­ing to var­i­ous stud­ies*, Aussie par­ents fork out be­tween $3000 and $13,000 in the first year for their first child. And by the time that child leaves home, par­ents will have spent around half a mil­lion dol­lars.

No time like the present

If those fig­ures sound ter­ri­fy­ing, don’t be dis­heart­ened. Fiona Lippey, founder of on­line fo­rum www.sim­ple­sav­ings.com.au and self-con­fessed ‘miser ex­traor­di­naire’, says, “If you think you can’t af­ford a baby, just remember so many peo­ple with chil­dren have less money than you do.”

Fiona is a case in point. When she and her hus­band had their first child 13 years ago, their house­hold in­come was just $12,000, yet it didn’t stop them hav­ing three more chil­dren. “If you can dodge think­ing that you must have a mag­nif­i­cent nurs­ery, the per­fect change ta­ble, beau­ti­ful wall­pa­per and so on, and re­alise that all your baby re­ally needs is cud­dles, nap­pies and food, then you’ll be fine,” says Fiona.

You may have just com­mit­ted to a mort­gage, or you may not ‘feel’ fi­nan­cially ready, but think twice about wait­ing un­til you’re per­fectly set up money-wise. “Noone’s ever truly pre­pared for hav­ing a baby, so wait­ing un­til all your ducks are in a row is not the best idea,” says Fiona. No mat­ter what your fi­nan­cial sit­u­a­tion, you can af­ford a baby but, as Fiona says, “You’re go­ing to have to make some changes.” Here are some key points to con­sider.

Iden­tify your pri­or­i­ties

The first ques­tion to ask is how long do I want to stay at home with my child? “There is your mo­ti­va­tion: do I want to pay a small for­tune for a stroller or stay home an ex­tra month?” says Fiona. “That’s where stretch­ing the money has its real pay-offs. The best thing for your baby is to make the smartest, most re­searched choice – and not an emo­tional one.”

Track your in­come and ex­penses

Long be­fore bub ar­rives, you need to look at your fi­nances. If you’ve never done a bud­get, try the Track­MySpend app from www.mon­eysmart.gov.au/tools-an­dresources/cal­cu­la­tors-and-apps/mo­bileapps/track­myspend. Or sim­ply jot down all your ex­penses over the next two weeks in a di­ary or a spread­sheet.

List fixed ex­penses (util­i­ties, in­sur­ance, rent/mort­gage), vari­able ex­penses (phone, gro­ceries, trans­port) and lux­u­ries (gym, din­ing out, beauty treat­ments). Next, com­pare that to­tal to your in­come and cal­cu­late how much, if any­thing, will be left over when you switch to one in­come.

“It’s the loss of that sec­ond in­come that be­comes the big­gest prob­lem for most par­ents-to-be,” says Fiona. “They are gen­er­ally not pre­pared for that.” If the fi­nal tally leaves you quiv­er­ing, it’s time to try liv­ing off one in­come and cut back as much as pos­si­ble.

“Yes, it’s im­por­tant to do a for­mal bud­get, but a lot of peo­ple won’t, so I say cut out all un­nec­es­sary ex­pen­di­ture right now. Don’t buy take­away cof­fee, make sure you’ve al­ways got a bot­tle of wa­ter with you and cook all your own meals,” she says. “See how low you can get and then you’ll know what your base level is.” It’s im­por­tant to do this be­fore you fin­ish work so you build up a nest egg and get used to liv­ing lean.

Check your en­ti­tle­ments

Your salary may stop but there could be new sources of in­come to look for­ward to. Check whether your em­ployer of­fers ma­ter­nity leave or if you’re en­ti­tled to hol­i­day, an­nual or long ser­vice leave. Gov­ern­ment as­sis­tance will also help out, in­clud­ing Parental Leave Pay (PLP), which is cur­rently set at the min­i­mum wage

($695 per week be­fore tax) for a max­i­mum of 18 weeks. To be el­i­gi­ble you must be the baby’s pri­mary carer, and meet cer­tain work and in­come tests as well as ful­fil res­i­dency re­quire­ments.

Ad­di­tion­ally, your part­ner may be el­i­gi­ble for two weeks of Dad and Part­ner Pay (DPP), cur­rently paid at the min­i­mum wage of $695 per week be­fore tax. Depend­ing on your fam­ily work sta­tus, in­come and as­sets, you may also be el­i­gi­ble for Fam­ily Tax Ben­e­fit, Child Care Ben­e­fit, Par­ent­ing Pay­ment, Rent As­sis­tance and a Health Care Card. For more in­for­ma­tion, visit hu­manser­vices.gov.au.

It’s the loss of that sec­ond in­come that be­comes the big­gest prob­lem for most par­ents-to-be.

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