Bringing new life into the world can be one of the greatest joys and experiences that many will go through, however, it can also be a very financially stressful period for families. From having to baby-proof your house, to exploring international or local daycare options that can in some instances cost thousands of dollars, or even having to explore the idea of giving up your job or some of your shifts, these can all have an impact on your finances.
What are some of the unexpected costs that often catch new parents by surprise..? That’s exactly what our team at Ally Wealth Management explores this week to ensure that expecting parents are financially ready and prepared for what’s to come.
Whether you’re just thinking about having your first baby in the future, you’re currently pregnant, or have recently given birth, we’re sure you’ll find some of the tips in this week’s article helpful. We know that every family may face different challenges and surprises when it comes to the financial impact of bringing new life into the world, but we have captured some of the more common surprises faced by new parents.
- Complications at birth
You may have carefully considered your options in putting the right health insurance plan in place with maternity cover, and prepared perfectly for a simple and seamless birth. However, this doesn’t always go to plan and there can be all sorts of complications, which with a high deductible or no cover for complications in place, can cost thousands, and in some cases, tens of thousands of dollars to deal with.
Consider the scenarios with this one, and ensure that you’re prepared for any surprises. Healthcare costs for pregnancies can be very high, particularly for Australian expats in some countries such as the US and Singapore.
- Utility Bills
Many new parents make the mistake of assuming that their utility bills are not going to change a great deal when they have a child. After all, how much power can such a small person really use. While this may sound logical, the reality is often very different. Whether it’s putting a heater on more regularly to keep your baby warm, employing a nanny or ‘helper’ to live with you and help out around the house, chances are your utility bills are going up and you need to be prepared for it.
- Fast Food
Sleepless nights, being tired all the time, constantly racing around for your little one – all of these factors often result in reaching for the convenience foods a lot more often. In many cases, after looking after your baby all day, the last thing most new parents want to be doing is standing over a hot stove to prepare dinner.
Be sure that you consider your meal plans ahead of time, which parent will be in charge of different meals, and consider both the health and financial impact of any convenience foods that you reach for. Thankfully, these days there are plenty of healthy options, however, they are often not the cheapest.
- Lost Income
In many cases, with the arrival of a new baby, one parent may decide to stop working or reduce the amount of work that they take on reducing the overall income for the household. While this one is often planned for by many parents, what might be overlooked is lost income by the parent that is still working, which might be in the form of overtime that was previously worked, bonuses and commissions earned in the past, or other performance-based income that may reduce as a result of a change in priorities.
Be sure to consider the overall impact to your household income, and explore the different scenarios, rather than just assuming it will just be the one parent not working that will change your earnings.
- Medical Bills
Medical bills, doctor’s visits, and other healthcare treatments that might be required are often going to result in a higher amount of your monthly budget being spent on healthcare. Some of these costs may be covered under your health insurance, while others may not. If you and your family are covered under your corporate / employee healthcare plan, then be sure to review your policy and ensure that you’re aware of exactly what is and isn’t covered.
You may want to take the opportunity to consider putting in place personal health insurance plans as a ‘top-up’ to your employee plan if you have one in place. Be sure to seek professional advice here and consider your options.
- New Clothes
The amount of money that is spent on new clothes often surprises many new parents. This may not even just be new clothes for the baby, such as the new shoes that they’re going to quickly grow out of, but it may also be new clothes for yourself if you no longer have time to get to the gym or get in those early morning runs.
If you’ve found some other costs that caught you by surprise, leave them in the comments below, we’d love to hear experiences from other parents to share tips for others that may be expecting. If you have any questions about how you can prepare your finances to start your own family in the future, please feel free to reach out to our team at Ally Wealth Management for a complimentary discussion where we can explore how to help you put the right plans in place.
Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.
Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.
Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.
General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.