Looking to bring a new life into the world? Here are the key expenses first-time parents should consider before starting a family.
Starting a family is a massive milestone. In fact, there are over 300,000 beautiful bubs born every year in Australia. And for first time parents, bringing a new life into the world is equal parts thrilling and terrifying. From deciding where to live to what school you’ll enrol your child into, there’s plenty of decision-making to be done. But, have you considered the true cost of what it takes to raise a child?
If you’re thinking about starting a family, it’s super important to understand how this new addition will impact your finances both now and into the future. So, what should you be budgeting for? And what steps should you take prior to pregnancy to set you and your family up for financial success? Keep reading to find out.
IVF and the cost of conception
For some, bringing a child into the world can be a simple endeavour. However, for many of us the road to starting a family is much more complicated. Research from IVF Australia reveals one in six Aussie couples of reproductive age experience difficulties conceiving a child. And if you happen to fall into this camp, it’s important to understand what the financial impacts may be for you.
IVF (or in vitro fertilisation) is one method of medically assisted conception that can be used to overcome a range of fertility issues and can give couples the best chance of falling pregnant. However, this type of fertility treatment can be extremely costly, with current pricing (as of February 2019) indicates one cycle of IVF can cost upwards of $9,828.
Although some patients who are eligible for Medicare can access no upfront fee options from selected providers, it’s essential for first time parents to have a clear payment plan and budget in place prior to commencing treatment. By speaking with your doctor and an IVF specialist, you’ll be able to map out what costs you’re likely to incur and will be able to take this figure into account when planning to start a family.
Upfront costs
For first time parents, the cost of having a baby can quickly mount up. From redecorating your spare bedroom to finding the perfect baby car seat, many parents-to-be can be blindsided by how expensive it is to welcome a new life into the world. So, what upfront costs will you need to budget for? Some common costs can include:
- Pregnancy and maternity clothes
- Baby clothes and nappies
- Feeding bottles and baby formula
- Bedding (including a cot, mattress, sheets, blankets and toys)
- Pram
- Car Seat
- Change table
Aside from these essentials, it can be tempting to splurge on luxe extras to spoil your upcoming arrival. From organic baby clothes to decked-out baby bags and so much more, it’s important to be aware of the extra expenses that can arise when it comes to buying for your little one.
Our tip? Create a clear budget for all your big ticket baby items and hold yourself accountable every step of the way. A great strategy to keep costs down is to visit garage sales and charity shops or check social media buy-and-sell marketplaces to nab yourself a pre-loved bargain.
Parental leave costs and entitlements
Aside from the upfront costs, it’s important for first time parents to understand how starting a family will impact their ability to work and earn an income. Taking significant time off work can be a massive financial strain for both parents, so it’s wise to discuss what arrangements could work for your family prior to pregnancy.
Under the Australian Government Paid Parental Leave Scheme, Government-funded Parental Leave Pay is provided to working parents of children born or adopted from 1 January 2011. Eligible employees will receive this government-funded Parental Leave Pay directly from Centrelink, or passed on via their employer. A payment plan for up to 18 weeks can be arranged to help you transition into your new role as a working parent. Currently, those on the scheme can receive $740.60 per week before tax (based on the weekly rate of the national minimum wage).
So, what criteria do you need to meet? To be eligible for payment, you must:
- Be the primary carer of a newborn or newly adopted child
- Have earned less than $150,000 in the last financial year (individually)
- Not be working during your Parental Leave Pay period
- Have met the work test in the last 13 months before the child’s birth or entry into care
Plus, Dad and Partner Pay for up to 2 weeks is also available to eligible families. For parents-to-be, it’s important to do your research and have a conversation with your partner to consider whether these entitlements will be an adequate source of income during the early stages of starting a family.
Childcare and schooling costs
For parents who are looking to return to work, childcare can be a big expense. Whether you’re returning to work full or part time, it’s important to do your research to understand the rates of different child care centres.
Let’s look at a few options. Figures from CareForKids.com.au map out the average rates parents can expect to pay at key types of child care. These range from a private live-in nanny ($17-25 per hour) to long day care centres ($70-$188 per day) and even babysitters ($15-$35 per hour, plus agency fees). Remember, these figures are just a guide and actual prices will vary between providers. Our tip? Speak with a variety of child care centres in your area to understand what style of care best suits your family’s needs and budget. There is also a Childcare subsidy calculator on Toddle.com.au to help parents understand what subsidy they may be eligible for.
As the years roll on, you may decide private schooling is a priority for your family. For first time parents, it’s essential to understand what this expense looks like for your child. The earlier you can factor this cost into your budget and start saving, the better off you’ll be in the long term.
However, this decision isn’t one to be made lightly. The latest figures from Australian Financial Review indicate private school fees have increased 3.1% this year alone (twice the rate of inflation). Figures provided by EdStart indicate the 2019 Year 12 fees for some of Sydney’s top private schools can range between $16,000 up to a whopping $22,000 per year. For families, it’s crucial you discuss how an expense such as private school fees will impact your cash flow. Remember, go back to what your core values are and check in to see if expenses like these are aligned with your values to ensure long term financial success.
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