We all know there are many more thought processes that go into having a baby besides just the question to be addressed here – can I afford this? However if you can rest easy knowing what is expected financially, then I will need to leave the rest up to you. Here are the top eight financial things to check before you go down this path:
- Check your entitlements
Do you get paid maternity leave through your employer?
Have you got any Annual Leave or Long Service leave accrued – sometimes you may like to take this on a part pay basis to get it spread over the entire year you may like to take off.
Human Services provide financial support for up to 18 weeks at minimum wage and this can be paid directly from them or through your employer. You need to meet a work test to receive this payment and it is not payable whilst receiving other benefits.
Dad and Partner Pay is also available and pays minimum wage for a period of 2 weeks.
Once you have had the baby Family Tax Benefits and parenting payments may also be available depending on your situation.
- Consider your Private Health Insurance
It’s a good idea to check what you are actually entitled to if you plan to go through the private health care system. One word of warning is that even having the top level of cover won’t mean there aren’t out of pocket expenses. Private health insurance only kicks in once you are in the hospital meaning that you are paying the gap to see your private doctor, as well as paying for scans along with the hospital gap that your fund may charge you. Expect an out of pocket expense of having your baby in the private system of around $3000.
There are other options such as the public system or a GP shared maternity care program that can be investigated.
- Get advice on your home loan
Can your home loan repayments afford you to drop to a one income household? Getting advice on this early and restructuring to make the most of your situation is definitely important. You can consider offset accounts or interest only repayment options.Just remember reducing your repayments is a short term fix – this loan still needs to be repaid and changes to your future incomes should be considered when taking out the loan.
- Give some thought to your budget
How much will it cost to raise a child and how much are you willing to go without? The initial years of having a family don’t impact too badly on your spending (probably just your income) with the average couple aged under 35 spending $1429 per week and the average couple with kids under 5 spending $1484 per week (see https://www.moneysmart.gov.au/ for other statistical data).
- Get Life Insurance
So many people wait until they are pregnant before reviewing their life issuance requirements but this can seriously hinder the type of insurance and the conditions around it that you can get. Have this sorted out earlier by a qualified expert in the field and ask that they insure you with the expectation that you will have children in the future.
- Think about your return to work options
Have you thought about the cost of childcare? Especially the cost of childcare on a part time salary. This will need to be factored into your budget planning and can influence your decision on how many days you return to work for.
- What about your Estate Planning?
Not to dwell on the morbid but this is the time when one’s thoughts turn to protecting their families in the case anything should go wrong. Write your wills in contemplation of children and ensure to include a guardian for them. Also make sure you get your Power of Attorney and Advanced Care Directive done at the same time.
- Don’t neglect your superannuation
Women live longer and hence require more superannuation savings to get them through and yet our superannuation takes a hit at times when we take unpaid leave. You should consider ways to keep your superannuation growing – consider the government co-contribution or spouse tax offset or just non concessional contributions. You can also consider increasing your superannuation contributions upon your return to work.
If you need assistance with your financial situation, drop me an email firstname.lastname@example.org or call on 08 8409 4333.
Cassandra is the mother of two young boys and Senior Advisor at William Buck. She has been assisting clients achieve their financial goals for over 10 years with a focus on holistic strategic financial advice.