Planning for baby

Going from two salaries to one and the costs of baby items can be daunting, but you can keep within budget.
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Family budgeting

Use our planning for baby guide to find out what you really need and ways to stay within your budget with our interactive budget tool.

In this article, you'll find information about:

You can also take a look at our shopping tips, and real advice from other mums.

For more information about Education and childcare, please take a look at our Fact sheets.

How to get your finances on track

Make a budget to identify potential savings. Work out where your money goes by keeping a log for a month, write down, or better insert in a spreadsheet, each expense and what it’s for (including any automatic deductions from your credit or savings accounts). 

Divide expenses into:

  • Fixed expenses such as insurance, home loan or rent payments
  • Other essential costs that vary from month to month such as petrol, phone bill or grocery expenses
  • Variable items such as going to a nice restaurant or theatre tickets

Once you know where your money goes you can look at each cost and see if you could make a saving. For example, going to a less expensive restaurant or making sure you get petrol on the cheapest day of the week.

Direct your savings into a fund for baby costs that you can draw on for all your extra expenses. If you have a mortgage with a redraw facility, consider using it to store some funds. 

Otherwise, use a high-interest online savings account. Ideally start a direct debit from your transaction account to the baby account. You could even try to live on one salary and pay the second one into your savings.

Credit card

Use the time you prepare for your baby to pay off your credit card. But first make sure you have the right card for your needs:

You can make big savings by using the right card. Consider, for example, the difference in interest you’ll pay with a rate of 9.85%, compared with 16.25%: if you make the minimum repayment plus $50 extra a month to clear a debt of $2500 you’ll save close to $300 in interest with the lower interest card.

Every dollar extra of repayments makes a difference and saves you interest, if you only pay the minimum you may never pay it off. See the table below for how much you can save.

How to repay a $1000 credit card debt*
  Time to repay (months) Total amount repaid ($)
Minimum repayment only  239  3034
Minimum repayment plus $50  19  1148
Minimum repayment plus $200  5  1045
* Repayments calculated for a credit card with 18.25% interest rate and $40 annual fee. Minimum repayments are 2% or $10, whichever is higher. These calculations assume all fees are paid plus the regular amounts shown.
Source: CANSTAR Cannex

Home loan

Repayment holidays

Many home loans offer a repayment holiday for six or 12 months while you’re on parental leave. During this time you can make lower or no repayments on your home loan. Ask your lender if you have this option. Conditions usually apply: you may have to make repayments of at least 50% of your salary, have a job to return to after your parental leave and have already held your home loan for a period such as 12 months and repaid part of it (for example you may not be able to owe more than 90% of the value of your home).

Trap interest is added to the loan during this period. It makes sense to repay your home loan as quickly as possible as the quicker you repay it the less interest you pay.

Fixed rates

If you’re pregnant, it may also be a good time to think about fixing the interest rate for all or part of your home loan. A fixed rate gives you security and allows you to budget. 

Trap you may end up paying a higher rate than variable rate borrowers, especially if you lock in rates when they are at their peak. 

Education savings

Saving to pay for your baby’s education is similar to any other long-term savings goal. It can be as simple as putting a few dollars a week into a high-interest savings account or as complex as developing a portfolio of shares.

What to save for

  • Education and extracurricular activities can be expensive. You're likely to need to pay for school fees, uniforms, excursions, books, transport, lunches, musical instruments, tuition, internet access and home computers.
  • Tertiary costs can include accommodation, transport, clothing, groceries and, of course, university or TAFE fees.
  • There’s no way of calculating exactly how much it costs to educate a child. It will depend mainly on the type of schools they attend. Figures can exceed more than $15,000 per year (in current dollars) for a 13 to 18 year old.

Your options

  • Investing in a high-interest savings account, shares or managed funds is one option for saving for your child's education. Generally, it's not the most tax-effective strategy, but may offer flexibility and investment choice.
  • Education-specific managed investments are tax effective. Carefully read each company’s product disclosure statement before investing and check if they’re flexible enough for your needs. For example, what happens if your child decides not to take up tertiary studies? Can you get the money out?
  • Paying back the mortgage to 'save' for your children's education can be an excellent strategy. It's tax effective and available to pretty much all home owners. But you need to be very disciplined, stick to your savings plan and make sure you don’t use the money for other things.


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