Financially Preparing for a Baby
Welcoming a baby can be one of life’s biggest joys – but also one of its biggest financial shifts. While it’s easy to get swept up in nursery decor and name debates, spending some time planning your finances can make the transition far smoother and less stressful.
How do you financially prepare for a baby?
One of the first things to consider when planning for a baby is how your income might change. Government support and employer entitlements can help bridge the gap, but they rarely replace your full income. Before the baby arrives, it’s important to:
Understand your paid parental leave and government entitlements
Factor in reduced work hours or time away from work
Create a realistic post-baby household budget
Knowing what you’ll have coming in and what you’ll still need to cover is the foundation of good planning.
What are the upfront and ongoing costs of having a baby?
Pregnancy and early baby costs
Baby-related costs begin long before birth. During pregnancy, the average Australian spends approximately $726 on medical expenses using the public system and $2,400 using the private system¹, including hospital visits and prenatal care. Then, there are essentials like a car seat, nappies, formula, prams and clothes – costs that quickly add up in the first year.
Childcare costs
If you are returning to the workforce, childcare costs might come into the picture. Data from Care for Kids shows the average cost of childcare in Australia is around $139.72 per day² before subsidies, making it a major line item in family budgets.
Education and long-term costs
As children grow, education costs increase. According to Futurity Investment Group, the projected costs over 13 years for a child starting their schooling in 2026 are:
Government schools: around $113,600
Catholic schools: roughly $247,200
Independent schools: about $369,6003³
All up, parents can expect to spend between $159,120 and over $500,000 per child⁴ over the first 18 years.
How can parents manage the cost of raising a child?
While this all might seem a bit overwhelming, planning early can make a big difference and allow you to enjoy all the good things that come with watching kids grow and sharing a lifetime of memories together.
Practical steps to take:
Build an emergency fund to cover unexpected expenses
Reduce high-interest debt before parental leave begins
Use budget planners and childcare subsidy calculators to estimate out-of-pocket costs and available government support
Do new parents need insurance?
With a child and partner/spouse depending on your income, insurance becomes an important part of financial planning and wellbeing.
Many parents review or arrange:
Life insurance
Income protection insurance
Critical illness cover
This can help protect you if you get diagnosed with a critical illness and have unexpected medical costs, or illness/injury prevents you from working (or returning to work). Many people consider organising insurance before the baby arrives. Some critical illness policies include female-specific and pregnancy-related cover for conditions such as eclampsia, ectopic pregnancy and certain congenital conditions.
Why planning early matters
Preparing for a baby can come with many emotions and excitement, and sometimes some financial anxiety. I’m here to help – we can plan ahead for your new arrival and get the right insurance in place to protect your growing family in the years ahead.
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Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.
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