Budgeting for baby

Worried about how you’re going to afford a baby? If you’ve found yourself with a nine-month deadline to get your finances in order, here’s how to budget and plan for the new arrival.

There’s a joke that sends shivers up the spine of expecting parents: “What costs more than a house but only weighs about 3.5 kilos? A baby.” A new addition to the family requires significant financial responsibility, but knowing what to expect will help keep you out of trouble.

First, create a budget so you can identify what you need to spend on – and any areas where you might be overspending. Break down your household expenses into categories such as groceries, car, insurance payments, phone bills and entertainment. To make this easier, use a budget calculator.

Be aware of upcoming baby-related expenses such as pre- and post-natal care, birthing classes, equipment and ongoing costs such as childcare. Add a new section to your household budget devoted to baby costs.

It goes without saying that you’ll need to start saving – if you’re taking maternity leave, you’ll experience a dip in income. Aim to save 10 to 20 per cent of your earnings from this point to cover you while you’re on maternity leave. If you’ve set your savings goal, determine how much you need to save in the time available to you by using a savings calculator.

Research what government assistance is available to you. Also see your company’s HR department to learn the details of your maternity leave entitlements at work.

Cut back on expenses – this is where you’ll have to reconsider things like subscription television and gym memberships. Post-baby, your yoga class may be a sanity saver, but could you get the same de-stressing benefits from following a DVD at home?

Be clever with credit – resist the urge to load up your card with baby equipment and clothing. If you do need to turn to your credit card to make these purchases, look for a low-interest credit card.

If you’re working towards paying off a debt that’s attracting interest, utilise a low-interest balance transfer to save you money instantly.