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Why you should save $10,000 before having a baby

20 March 2021

Why you should save $10,000 before having a baby

Having a baby is an exciting milestone in any person’s life – a time of new meaning and hopefully soul-stirring joy. It’s also a time of great expense, with some studies showing that new parents can spend up to $10,000 on their baby in the first 12 months of life. Sadly, this amount comes as a shock to many people, with 75% of Aussie parents underestimating the cost of having a child.

The truth is, financial stress is the last thing new parents need. As families adjust to the huge change and mounting sleep-deprivation of life with a little one, worrying about accruing unexpected expenses is a drain on their energy they can rarely afford. If possible, saving a nest egg of up to $10,000 – before bub arrives – can ease the financial burden in that first year of life. It may sound like an awful lot, but when you add up the list of key expenses we’ve detailed below, you’ll see the amount is actually realistic.

From our research, we know:

  • 50% of parents we surveyed wished they’d had more information available regarding the true costs of having a child.
  • Only a third said they thought they had a good idea of how much the first one/two years of their child’s life would cost.
  • 37% of parents said they didn't have much of an idea at all.
  • 42% only started saving when they found out they were expecting.
  • 29% didn’t set aside any extra money at all.

One other major takeaway from the research? Nearly half the parents we surveyed wished they’d saved more. Not only that, they could have done so if they’d known what expenses to expect in advance.

So in the spirit of helping new parents enjoy expanding their family rather than worrying about financial pressures, we’ve compiled a list of key expenses in your child may need in its first year of life. For some, it may be time to open a dedicated savings account and get saving!

Key expenses in your baby’s first 12 months:

  • Furniture. Decorating a nursery can be a heap of fun, with many ridiculously cute prints and soft furnishings available for a steal. But shopping for key pieces of furniture – namely the cot, change table and nursing chair – can be an expensive exercise. Even if you shop exclusively at more affordable places, you’ll still need to budget a few hundred dollars.
  • Pram and car seat. A good pram and car seat might be worth investing in, as together they actually allow you to get out of the house! Of course, when it comes to car seats safety is paramount, so do your research. Many people want a pram that is comfortable for bub, wheels along smoothly, is the ideal height (stooping over a pram can be uncomfortable), and that contains a sturdy basket underneath to store nappy bags and grocery shopping (it’s hard to push a shopping trolley and pram at the same time!) You may be able to pick up a quality pram and car seat second-hand, but they may still cost up to $400 each, so keep this in mind.
  • Nappies and wipes. Little ones tear through nappies at an alarming rate, with newborns requiring up to 12 nappy changes a day. Make sure you choose a brand that prevents an uncontained poo-nami, even if it means spending a few more dollars. Expect to spend around $150 every three months on nappies minimum.
  • Clothing. Dressing your baby in sweet gifted outfits for gatherings and family photos is one of the many exciting things about parenthood. But there are a lot of practical clothes required in between. Onesies, singlets, beanies, socks, mittens – the list adds up. And so do the dollars. We suggest allocating upwards of $500 on clothing for your baby. Pro tip: second-hand is just as good as brand new and can save you a heap!
  • Childcare. If you decide to send your child to daycare, you’ll need to factor that cost into your weekly budget. The total out-of-pocket expense will depend on your family’s combined income and the amount of government rebate you’re eligible for. We recommend doing these calculations in advance.
  • Health insurance. Investing in private health insurance can be a significant cost, but for some it’s a game-changer for their peace of mind should bub require intensive medical care. If you’re going down this route, add your little one to your family cover as soon as they’re born. We recommend factoring in $200+ on a monthly insurance bill.
  • Wraps, blankets and toys. Soft swaddles and blankets in natural fibres are a must with a newborn. Add in frequent spit-ups and vomits and you’ll go through an awful lot of them! Toys aren’t so important in the beginning, but become vital as your little one blossoms and grows.

As you can see, having $10,000 saved before having a baby will reduce a huge amount of financial stress.

Still need help with your budget before the baby arrives? Click here to download our baby budget calculator.

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