Welcoming a tiny human into the world can bring immeasurable joy and love into our lives. Though, even the most prepared parents can experience unexpected financial pressures. With rising costs of living, new research is showing a gap between the expected costs of parenting and actual costs. While everyone’s situation will be different, making time to plan and organise your finances before having children will often ensure greater peace of mind and confidence about your future. Sharing insight into how to plan for the price of parenting, Wealth Adviser Kathryn Creasy shares some of her tips for expecting parents.
Start having conversations
Children create treasured moments and bring countless priceless memories into our lives. To ensure these moments aren’t clouded with financial anxiety, it makes sense to plan sooner rather than later. According to CHOOSI, childcare, education, food and groceries are the most underestimated costs by Australian parents. Kathryn believes that couples need to have conversations early.
“The best place to start is to understand what you, your partner and your baby want and need. Be on the same page with your partner about how you will manage things before you start having children. If the conversations don’t come up until you are tired and stressed with a newborn, it will be much more challenging.”
Savings are important, and an emergency fund is essential
Most parents will bend over backwards for their children if it means making them feel safe and secure. But, parenting today is a whole new ballpark to what it was a generation ago, with costs significantly different. According to Kathryn, saving is important of course, but money set aside for a rainy day is essential.
“Saving is significant, but beyond having money for the costs you know you will incur, having an emergency fund that can be called upon when the unexpected occurs can make life much easier. For most people having children, we see them saving enough to cover all their upfront costs and a buffer that will help if they are on a reduced income in the first few years of the baby’s life. However, they often don’t then have enough time to return to work to save for the second baby. So, remember that if you don’t use all your emergency savings the first time round, they might come in handy for baby number two.”
Do your research
It’s human nature to think that ‘better’ will come with a bigger price tag. Rationally, we all know that this isn’t always the case. When organising your financial house, simple changes in habits can result in significant savings. It all comes down to research.
“Not everything needs to be new or full price. Buy nothing groups exist. Facebook Marketplace, sales and swapping clothes with friends who have children of different ages are all good options to keep costs down. Talk to friends to get their insight into what costs more than they expected and what they would do differently if they had their time again. You can also get involved in the community and the myriad of free activities available for children. Often local councils will have a range of things on offer that will keep your little ones entertained and won’t cost much if anything.”
Bringing a new baby home should be one of life’s most exciting, rewarding moments. New parents have enough to deal with, without the added stress of financial pressures. We all know that children can come with significant costs, so like any other significant decision, making time to plan, to getting your financial house in order, and speaking to a trusted professional about your options will likely be invaluable. It’s all about that peace of mind, sleep at night feeling – something that new parents, need the most.