Many parents wish they were more financially prepared before having children – but it’s never too late to start. Here are some key steps to help parents feel more in control of their finances.
Babies can leave parents financially blindsided
“Babies don’t come like an Uber eats delivery,” says Kate Browne, the Managing Editor of Finder.com.au.
And ain’t that the truth!
No matter when your little bundle of joy makes their entrance into the world, the financial changes can leave many parents a little blindsided.
Kate told Feed Play Love that in a recent survey of 2,000 parents with children under 12, half said they wish they’d had more savings and bought their own house before the birth of their first child.
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“In fairness,” says Kate, “There’s actually never a good time to have a baby. And we all bury our heads in the sand a bit when it comes to money. But it’s really important to know that when it comes to finances, it’s helpful to think of things like a marathon, not a sprint.”
Kate says Finder’s research has revealed some key steps that all parents can take to help them feel more in control of their financial situation.
1. Look beyond the first year
“It’s easy to get carried away with the short-term costs like prams and cots and car seats, but not the long-term financial impacts, like loss of income from one parent staying at home, or daycare fees,” says Kate.
“When I chose to go back to work, I chose to pay $130 a day in fees. And I only went back to work three days a week. But that meant I was part-time, less income, which meant 80 percent went on daycare.”
Listen to Kate Browne on Kinderling Conversation:
2. Older parents aren’t necessarily better off
The average age of first-time mums in Australia is 30.5, but that doesn’t mean that just because we’re older, we’re making better financial choices.
“I was an older mum and I’ve only just gone back to work full time, after 10 years working part-time. If I’d known the impact on things like super, I would have planned ahead better,” says Kate.
“The small advantage for us was that we only just owned our own home, but that’s a major stress on people.”
3. Simple ways to get started on a financial plan
In a perfect world, parents would do this kind of planning before the kids come along, but it’s never too late to make a positive change to your finances.
“Do a really thorough audit of your expenses,” says Kate. “Look at your bank statements – what are you doing every day that can be cut out? It can be quite surprising to see your weak spots. Also, look up your credit score (Finder does a free report).”
Once you know where you’re at financially, it’s time to make some changes.
Kate suggests starting with:
- Paying down any loans
- Reducing your credit card limit
- Consolidating all your ‘little loans’ and making a clear action plan for paying them back
- Looking at the facts in black and white
- Getting financial advice
- Shopping around on things like mortgage providers and health insurance
“It’s not the funnest job, but highly worthwhile doing,” says Kate.
4. Talk with your employer
Job security becomes imperative once the kids arrive. Kate encourages all parents to have a frank conversation with their employer to suss out their options.
“We all know people who have been made redundant while on maternity leave,” says Kate.
“So don’t be afraid to have a chat with your employer before you head off to have your baby. Many companies are expanding their policies to include things like paying superannuation while you’re on maternity leave, or flexible work options when you return.”