Managing Your Money With a Baby on the Way

Welcoming a new baby into your life transforms every aspect, including your family’s budget. Between time off work, lower earnings, and the extra expenses of child-rearing, handling your home loan might seem overwhelming. One way to feel more in control is to get on top of your finances early on. Take a look at these practical tips that can help ease money stress so you can focus on what really matters: your new baby.

Start planning early

Having a baby is a big change, so it’s best not to leave planning your finances until the last minute. The sooner you prepare for and adjust to your new circumstances, the better prepared you’ll feel. Calculate what your household income will look like during parental leave, factoring in the extra expenses you’ll need to cover. Talk to your mortgage broker if you need to about options such as refinancing to a different loan structure, or setting up a redraw or offset account to give you access to extra funds when you need it.

Rework your budget

The arrival of a new baby can be life-changing, especially when it comes to finances. Switching to a single or reduced income can be a real strain on the budget. Add in new costs like nappies, formula and childcare, and things can quickly get tough. To help you prepare, plan out your income and expenses for the months ahead. Look for ways to trim non-essential spending to make your budget go further.

Create a financial buffer
Having a cushion for tough times offers immense reassurance amid this life shift. Try simulating life on a single income prior to the birth, channelling any surplus into debt reduction or a dedicated emergency fund. Set up automatic transfers to savings on paydays. Consistent small contributions to a savings account can build a substantial nest egg over months.

Complete a financial health check

Planning for a baby is the perfect time to take a fresh look at your finances. Start by checking your insurance cover. With a little one joining the family, it’s important to make sure you have the right level of cover in place. Review your health insurance to see if it covers maternity care and if there are any waiting periods. Go over your life insurance with a Financial Adviser to ensure your growing family is protected should the unexpected happen. Work with your mortgage broker to review your current mortgage structure and repayments. And consider topping up your superannuation for the parent taking time out of the workforce, to keep your retirement savings on track.