I can see how having children can be the most rewarding and life-fulfilling experience for parents. Spending time with my niece and nephew and seeing them grow gives me great joy and insight into parenthood.

Starting a family or a growing family brings a roller coaster of emotions and financial stress as parents assess the upcoming changes in their life and finances. I’ve recently met with a couple expecting their first child and they are confused about how to do this and what financial support is available to them. Additionally, while focus is on immediate income and expense needs, other financial considerations such as superannuation and insurance can get left behind.

Should planning for a baby start after conception?

From my experience expecting parents tend to focus on the cost of having children in the sense of preparing for the babies arrival, prams, cots etc. – and longer-term education costs. In reality though, the most significant cost of having children is the loss or reduction in employment income, during both the initial maternity/paternity leave and also via reduced working hours over the longer term.

From a planning point of view, it’s important for a couple thinking about starting a family to know what that future cash flow shortfall will look like. This will show how much a couple will require to save in cash before the baby is born in order to get through the child-raising year without having to drastically change their standard of living.

The government provides a range of financial support initially which can supplement or replace reduced cash flow. Note that this is only very short term and it is important to discuss with your partner what happens after these payments stop.

Parental Leave Pay

The government offers 18 weeks of minimum wage payments (currently $740.60 per week) to the main caregiver of a new baby.

To be eligible, the primary carer of the newborn must have worked 10 out of the 13 months before birth (or adoption) of the child and at a rate of least 330 hours over the 10 months (equivalent to approximately one day per week on average). Have individually earned less than $150,000 in the last financial year.

Don’t worry, dads or partners are not forgotten!

Dad and Partner pay

The government offers two weeks of minimum wage payments (currently $740.60 per week) to the dad or partner of the primary carer.

Any initial financial stress is generally forgotten by parents as the majority of conversations I’ve had with clients is about their child’s achievements. I’ve often heard how sleep-deprived new parents are once their baby is born and planning for the new one’s arrival by removing some of the financial stress will help a couple to focus on caring for the newborn.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.