Having your first child is both exciting and daunting. It’s certainly a gift, however, not a cheap one!
A baby is a new mouth to feed with added medical bills and expenses you haven’t had to deal with before. Whether you’re planning your first child or expecting their arrival in a matter of months, it’s vital you take the necessary financial precautions to ease the economic stress of parenthood. Here are a few of our recommendations:
Get Acquainted With Your Health Insurance
If possible, start to think about health insurance before you even think about pregnancy/fatherhood/having a new mouth to feed that may seem like it’s primary diet is your hard earned.
Health insurance is complicated and it’s best to figure it out as early as possible. First, decide whether you want to go private or public for pregnancy-related health care and birth expenses. If your preference is private, you will need to check what pregnancy and birth-related costs will be covered by your private health insurance. Additionally, many private health funds impose a waiting period of up to 12 months before you can claim on pregnancy and birth-related costs, so your insurance is an important thing to organise well in advance of having a baby.
Be well acquainted with which services your health insurance covers, what places are in the network, and how much coverage your plan provides. You may even want to consider purchasing supplemental insurance for the next year or two for additional coverage.
Finally, an easy thing to overlook is family health insurance policies. Family health insurance is important because as soon as the baby arrives, she/he will need to be covered by insurance as well. Your individual or couple policies that include pregnancy may automatically cover first child for up to two months after birth, but after that, the baby will need to be covered under a family policy. As your life stage changes, so do your insurance needs.
Determine Your Baby Budget
You’re about to be purchasing heavily from grocery store aisles and stores you had never even thought about before now (think baby food, diapers, baby clothes, etc.). Now’s the time to do some exploring, venture down those aisles and into those stores. Get approximate costs of your soon-to-be everyday items (and those that won’t be every day) and start to map out how much you’ll be spending.
Here are some things to look into cost-wise so that you have a better idea as to what to expect:
Couples health insurance with obstetrics and childbirth cover
Common Costs After a Baby:
Family health insurance policy with obstetrics cover and paediatric cover
Blankets and newborn clothing
Crib/Cot and their travel equivalents
Pram or Stroller and their travel equivalents
Formula and baby food (further down the line)
Basically, this is only a short list of things you’ll need to purchase for your first child. Do some exploring in your local baby stores, conduct some ‘informational interviews’ with friends who have been through this stage already and read as much as you can.
Ask for Hand-Me-Downs
There’s absolutely nothing wrong with accepting used clothing or toys for your first child. You’ll probably agree with that statement even more once you start doing the budgeting described above. Baby costs add up extremely quickly and by accepting hand-me-downs, you’ll save yourself a good bit of money to be used for more fun things later on. After all, wouldn’t you rather spend money taking your child on a fun first vacation later down the line than blow through budgets purchasing clothes that may fit your growing child for a few quick months?
Adjust Your Personal Finances for Your New Role
Parenting is a job that you’re going to have for years to come, so planning for the future is crucial. Here are a few of the personal finance steps you need to consider:
Adjust your beneficiaries. If you don’t have life insurance for yourself or the primary breadwinner in your household, you should. And then, you should add your child as a beneficiary. The same goes for your superannuation. Keep in mind that you’ll need to make adjustments to ensure when and how your child will have access to the money. A will and/or trust is the best way to do this.
Disability insurance. You’re far more likely to need disability insurance than life insurance. Make sure you have enough coverage to meet your expenses if a disability puts you out of work for several months. Remember, your monthly living expenses will go up after the new addition.
Write or adjust your will. Tragic things happen and you want to ensure your child is taken care of in the event that one or both parents die. Designate a guardian so the courts don’t have to. Your will is only one part of estate planning, but it’s a good place to start.
Keep funding your retirement. With the all-consuming excitement of a child, it’s easy to forget your personal goals and long-term plans in light of the huge responsibility. Stay on top of your retirement plans so your child doesn’t have to support you in old age.
Save for education. Private education and University, if you’re happy to foot the bill, don’t come cheap, but you can make it more manageable by starting to save early.
Giving birth to and raising a child is incredibly exciting, particularly if this is your first time. Just remember that it’s expensive. There’s no shame in asking for help, reaching out to others and doing whatever you can to be as prepared as possible for this monumental role you’re about to take on.