Starting a family is one of the biggest and most exciting (see also; daunting) decisions you’ll make – even if it wasn’t completely planned! For those looking ahead and wanting answers on all the big and small costs and considerations you have ahead of you, look no further. There are 5 key stages we consider when helping our clients plan for starting a family.
Stage 1: Family Planning and Conception
Family planning and conception can be a pretty private and personal thing, but for many, this is one stage that can have a huge impact on your financial situation (let alone your emotional and mental wellbeing). For some, getting pregnant may require medical interventions like IVF or considerations relating to fertility treatments, adoption, or egg freezing. Most of these aren’t free, and most don’t carry much in the way of benefits via Medicare or your private insurer.
Start out by evaluating the costs associated with your situation. If you’re able to conceive naturally, remember there could still be costs associated with appointments with your General Practitioner, pregnancy and ovulation tests (up to $55 for some kits!), pre-conception and pre-natal vitamins. You may also require one or more specialist appointments, decide to opt for a private OBGYN, or want to give birth through a private hospital. Make sure you plan ahead for these costs, as premiums for private health cover for pregnancy and birth can skyrocket quickly depending on the level of cover you choose, and waiting periods can be a shock.
If for whatever reason you need to seek some assistance conceiving, you’re looking at specialist consult fees, testing fees (ultrasounds, bloods etc.) before any treatment is even provided. Consultancy fees with a fertility specialist can range around the $100 to $200 per session mark with less than 50% rebated by Medicare. Tests can range from free or fully rebated, to almost $600 for detailed ultrasounds – before you’re even pregnant!
If you’re part of the fertility treatment or IVF crew, you can expect some hefty costs. The good news is, you likely have some control over when you commence your treatments (and therefore giving yourself time to budget). There are also some benefits and rebates available during this stage to help. In NSW, pre-fertility screening attracts a rebate of $250, while those undergoing full fertility treatment (IVF) cycles can apply for a rebate of $2,000. There are also some options around payment plans, payment via your super, or lower-cost fertility treatment through publicly supported IVF clinics.
Check out NSW Health, or your local state’s website to see what rebates and options are available to you.
Stage 2: Pregnancy and Preparing for Parenthood
This is the positive you’ve been waiting for! Once you reach this stage, you have the opportunity to start preparing financially for your upcoming arrival. By this point, hopefully you’ve started some planning and know a bit about the pregnancy-related medical expenses you might be facing. Costs vary based on your choice of public or private healthcare, so if you haven’t already, ask lots of questions and shop around if need be to ensure you’re getting the medical support and care that matches your needs and your budget.
It’s also shopping time for some of the fun stuff! Budget for the essential baby items such as car seat, pram, cot, and changing table. Don’t skimp on safety, so be willing to put extra funds towards good quality car seats. Other items you might feel comfortable with browsing Kmart, IKEA, Facebook Marketplace, or accepting some hand-me-downs from friends and family who have recently outgrown the new baby stage.
Create a pregnancy savings fund to cover your medical expenses and baby essentials as early as you can. Budget anywhere between a couple of hundred dollars up to $6,000 depending on your research, and you should be in good shape by the time your little one arrives.
Stage 3: Parental Leave and Return to Work
As your due date approaches, planning for parental leave becomes crucial. There are some questions you should sit down & consider the answers to:
- How long are you having off?
- Is your partner having time off?
- Are you going back 2, 3, 4 days a week or full-time?
- If you have a partner, how are you balancing your leave options?
- What’s available to you in terms of paid and unpaid parental leave – do you have access to paid parental leave with your employer, and what are you eligible for from the government in terms of Parental Leave Pay?
- Check the means testing on any government benefits – how much are you actually going to receive during any time off and budget for this if there’s going to be a reduction in your income, and estimate how long this will apply for.
Note that there were upgrades to the government’s Paid Parental Leave Scheme on the 1st July 2023, so be sure to double check what’s available and what the eligibility rules are before you start your planning.
The added flexibility means there are more options for blending the paid parental leave with your employer’s paid leave to allow for a smoother financial transition and a reduction of the income gap.
If you work out these items nice and early, this should allow you to have a smooth transition back to work, and plenty of time with your new family member.
Stage 4: Child’s First Year Expenses
The first year of a child’s life can bring a wave of new expenses. Items like nappies, wipes, formula (if needed), medications, and clothing contribute to your monthly budget. While these costs might seem small individually, they can add up over time.
The uplift of your grocery bill is going to be the most noticeable change. If you’re going down the path of disposable nappies, that can cost up to $3,000 a year including wipes and creams. Budget roughly $60 a week to cover this cost and remember, while some of these things you can buy early or stock up on to help out, don’t go crazy. Babies grow into the next nappy size faster than you probably realise!
Then there’s formula and potential medications. If needed, formula can start at about $30 per tin once a fortnight, up to $40 per tin once a week for those babies 100% formula fed. Medications can be a real unknown cost. While we all hope your little one won’t need any medication costs, sometimes you might be in and out of the chemist more than you expected. Just to be safe, for a mid-range budget, allow for $500 to $1,000 for the first year.
Clothing is a great example of something you can challenge yourself to be frugal with. If you’ve got very generous family and friends in your life, you might end up with almost $0 spent in this area as your pile of singlets and onesies, and hand-me-downs are passed on to you. But if you’ve got a growing baby going from the 0000 size and up, you might want to allow for $30-$50 a month for clothes in the first year to save you constant washing.
All of this means one thing – it’s time to budget, not just save. Be prepared to rework your numbers to make all those small costs fit into your regular spending, and get creative on cost-saving options to reduce the bill shock.
Stage 5: Child’s Future Financial Security
Looking beyond the immediate needs, and planning for your child’s financial future should be a big factor in your considerations. Saving for education, helping them buy a home, or providing a financial cushion for their adult life requires long-term financial planning.
We get heaps of questions around this; when do I start investing for them? Can I support them through school and uni? Can I contribute to their first car? How do I help them buy a home? What it comes down to is setting them up for their own financial future, and their own financial freedom.
There’s three things to remember when you’re approaching these questions. Number one is: don’t forget about yourself. You still need to be dedicated to your own financial future through investments, reducing debt, and saving, and this in itself is a way of looking after your children. Don’t spend too long worrying about when to start a savings or investment plan for your children, just start small and with something manageable.
Number two, keep it loose. There’s no way of knowing exactly what your child will need, or how much you want to give them until they’re a bit older. It’s unlikely that at 18 or 20 your plan will be to just drop a large sum of money into their bank account, so keep it flexible until you know what it is they most need, and what the best way of contributing to that is. For example, you might decide it’s most beneficial to earmark those funds for a private education in their senior years, or towards university fees which can be paid directly by you.
Third and last thing to keep in mind is your risk tolerance. Determine what tolerance of risk you have given the length of time you’re looking at, and use this to guide your strategy. This part in particular is best discussed with a Financial Adviser so they can help guide your strategy and advise on the best place for your funds.
A Financial Adviser can also give you an understanding of your investment options, tax implications and projections for the coming years so you can make informed decisions.
Navigating Childcare Costs
Your next upcoming area to consider is all about childcare. For some families, this can be a significant financial consideration if other options like working from home, relying on only one income, or stretching the grandparent babysitting hours aren’t practical or possible.
From July 2023, the government increased the childcare subsidy (CCS) for most families using early childhood education and care, which includes outside-of-school hours care. It’s worth researching if the changes will impact you as some families who were previously not eligible for CCS, will now be able to receive it. Remember to register for the subsidy online at Services Australia, and ensure you have an online Centrelink account.
It’s also wise to even add childcare decisions into the ‘planning’ stage when you’re thinking about starting a family. This is because some childcare centres have up to a 12 month waiting list for entry, and only do intakes once per year!
We hope this has helped you a long way towards understanding what lies ahead of you in your family planning journey. By researching what’s available to you, you’ll have more time to evaluate any out-of-pocket expenses and budget accordingly.
Starting a family is a journey filled with joy, challenges, and careful financial considerations at every stage. Now that you’ve got a head-start and a bit of insight into what to expect, you can focus on the good stuff!