How to avoid money stress as a new parent

A huge 75% of new parents underestimate the cost of having a child, research from Credit Union Australia (CUA) shows. Indeed, almost half of those surveyed regretted not saving more money before starting a family. Around 40% said that with hindsight, it would be good to save between $5,000 and $8,000 to cover the extra costs.

So how can you avoid money stress as a new parent? Let's take a look.

Costs to prep for

Well the first thing to do is to be prepared. That means knowing what you're in store for. Some expenses that surprised new parents the most were:

• Essentials such as nappies
• Daycare
• The loss of income, from having only one working parent
• Healthcare
• Food and formula

In Australia, daycare costs are especially high and this is worth highlighting. Research Mozo conducted last year found that the average weekly cost of childcare in Australia is around $246 per child. Mozo calculated that a family could have saved approximately $5,774 during the 13 weeks of free childcare parents received last year.

Now that you know what costs to look out for, the next step is to actually start building up your savings stash.

Stashing savings

We have some handy tips to help get your finances in order before your newborn joins the world:

• Open multiple savings accounts. Otherwise known as savings buckets, multiple savings accounts can be a neat way to save for multiple things at once. So you could have a savings account specifically for daycare costs and another for essentials such as food and nappies. Some banks that offer this include ME Bank, ING and 86 400.
• Review household expenses. Take a look at your current outgoings and see where you could cut back. Could you switch energy providers and save money? Or could you refinance your home loan and take advantage of a lower interest rate?
• Cut unnecessary costs. If ever there were a time to take stock of all your direct debits, it would be now. Scan through your transactions from the past few months and see if there are any subscription services you're paying for that you've forgotten about. It might be time to give anything you no longer use the boot!
• Embrace the sharing economy. It's no secret that baby clothes, toys, high chairs and car seats don't come cheap. So, instead of buying these items new, why not take part in the sharing economy. To do this you can join a Facebook group for parents, download the OLIO app where people give away items for free and look for secondhand bargains on Gumtree.

Looking ahead: typical family expenses

Although having a healthy baby is probably your top priority right now, it doesn't hurt to have an idea of what expenses you might face a few years down the track.

Some questions you and your partner might want to discuss are:

• Do you want your child to have private health insurance?
• Are you keen on sending your child to private school?
• What about extra-curricular activities? Are you willing to pay for your child to learn a musical instrument or attend a dance class?
• Do you want to save up for your child to go to university?
• Is a family holiday every year important to you?

Most of these things will be your decision, but others may end up coming down to the individual thoughts and feelings of your child. For instance, your child may not want to attend university. Or they may not have an ear for music and instead prefer to join an after school club.

Regardless of what happens, thinking about all these things now could help give you an idea of the amount of money you need to start putting away. It might even help you decide on big life changes. You might decide to move to a less expensive neighbourhood, or you might look for a job with a bigger salary.

These are all big questions - let's dial it back a bit. You can start your money-savvy, parenting journey simply by making sure that you have the right savings account to suit your needs.

Head to Mozo's compare savings accounts page for a list of accounts to start stashing your cash. Or, if you don't feel like clicking through, check out the offerings below.