The cost of having a baby in Australia

A few decades ago (before you could open multiple savings accounts at the touch of a button), parents had a pretty effective way of putting money away for their kids’ future. It was called… a piggy bank.

‘Kid cash’ was kept aside from family finances by stuffing it into a physical ceramic jar – not to be touched by child nor adult until it was needed.

Old school? Sure. But it worked. These days, with recent research showing that more than half of new parents (56 per cent) underestimated the cost of having a baby, it seems that prospective mums and dads can’t start saving soon enough.

And that’s not the whole story because, in addition to underestimated costs, there are also unexpected costs, which further eat into the parental budget.

In this article, we’ll take a look at the top 10 of both, plus some tips to ensure you’ve got enough tucked away before bub arrives.

So how much does it cost then?

As there are so many variables involved, and everyone’s situation and priorities are different, it’s impossible to give a one-size-fits-all dollar figure for having a baby. What you can do though is look at how much couples planning on starting a family think they’ll need to save in advance as opposed to those who’ve already had kids.

Interestingly enough, the numbers aren’t too far apart, with the prospective parents saying $32,910 and their already-burdened counterparts saying $30,400.

Nonetheless, given that we’ve already seen that more than half of parents underestimate the true cost, let’s take a look at where the disparity lies.

Most underestimated costs of having a baby

Here are the top 10 most underestimated costs of having a child:

• Childcare (38%)
• Education (36%)
• Food and groceries (35%)
• Nappies and hygiene (30%)
• Hobbies and extracurricular activities (29%)
• Clothes and footwear (25%)
• Pharmaceuticals and health (22%)
• Baby paraphernalia - e.g. cots, prams (22%)
• Technology items – e.g. baby monitors (22%)
• Holidays (21%)

Most unexpected costs of having a baby

As we touched on earlier, there’s a difference between underestimating a cost and not taking it into consideration at all. With that in mind, let’s now look at the top 10 most unexpected costs of having kids.

• Growing out of clothes and footwear so quickly (34%)
• Lost income due to unpaid parental leave, time off for unwell kids (29%)
• Lessons, tutoring, school trips etc… (27%)
• Unplanned health care (27%)
• Birthdays and social events (24%)
• Utility bills (23%)
• Holidays (20%)
• Health insurance (19%)
• Need for bigger home (19%)
• Upgrading/fitting out car (16%)

A budget planning calculator can help

While this may seem a little overwhelming at first glance, an online budget planning calculator can be an extremely valuable tool to help you make sense of the various expenses required and how to make them work within the context of your income.

We also have a downloadable Baby Budget Calculator if you’d rather something more specifically baby-related.

The benefits of a separate savings account (or accounts)

Perhaps the most effective way to cope with the expense of starting a family is through the clever use of savings accounts. Here are three reasons why doing so is a smart move.

More visibility = less stress

We all know you don’t need extra stress when you’re doing your accounting on four hours’ sleep. Tracking your progress is a lot easier when your baby savings figure is laid out in front of you, not tied up in general savings.

Without a separate account, your total savings figure could easily deceive you into thinking you’re prepped for pregnancy, when in reality half of that is earmarked for car repairs, or an upcoming holiday.

Less likely to sneak into your savings

The more money you’ve got pooled in one place, the more likely you are to dip your toes in. A dedicated account stops you from misspending any money that should go directly to the little ones and keeps your balances in check.

This being said, having money stashed away in a separate account doesn’t necessarily remove the temptation to spend it. If you need a little extra help in that department, The Vault might be what you’re looking for.

Taking less than five minutes to set up, The Vault hides the balance of your account to help you resist the urge to splurge. Don’t worry though, it’s not a real vault. You can still access your money whenever you need it.

Giving your accounts nicknames can help keep you on track

As we have seen, the costs of having a baby are many and various. Having dedicated savings accounts (at least for the main ones) could help you reach your goals quicker and ensure you’re feeling prepared for when that money is needed. One clever way to keep you focussed is to give these different accounts nicknames (e.g. ‘Bub’s clothes’) so you know exactly how much is earmarked for what.

The new-school piggy bank

Despite its obvious limitations, the old-school piggy bank had a certain charm. Plus, emptying your pockets of small change every now again didn’t really feel like saving. The amounts were so small and the deposits so regular, you’d hardly notice it.

Well, guess what? You can have all those benefits in 21^st century form thanks to The Boost!

Simply set an amount from $0.01 to $5 to automatically transfer to your Great Southern Bank Savings Account every time you use your Great Southern Bank Visa Debit card.

So now when a takeaway cup of coffee makes you happy, you’ll be contributing to the cost of your new kid’s nappies.

We’re here to help

If you’d like to speak to someone about anything in this article, feel free to give us a call on 133 282. Alternatively, you can always pop into your local branch for a chat.