Starting a family, or planning to start a family, can be a joyous and exciting time. But make no mistake, it can also be a challenging time and an emotional rollercoaster. To help smooth the journey it is important to get on top of your day-to-day finances early. Studies have shown that at a minimum it costs more than $300,000 for two parents to raise two children up to the age of 17. And if you plan ahead these costs won’t be as daunting in the longer term.
When couples or singles approach a financial adviser about starting a family, three common questions arise: Can we/I afford to have a baby? What benefits are we/am I entitled to? And what does our/my financial future look like?
Renee Tang, a Newcastle-based financial planner at First State Super, says there’s not a common answer to these questions as every person’s situation is unique. However, a good financial planner will not only answer these questions, but dig deeper to better understand where you want to be in the long term.
Can you afford it?
One of the first considerations when starting a family is the potential loss of household income and how to manage it. Two common scenarios that need to be addressed are: what if the primary carer loses some or all of their income and how long do the parents plan to be out of work?
James Gerrard, director and financial planner at financialadvisor.com.au, says a common scenario is a couple who are saving $2000-$3000 a month on two incomes before having a child. If one income is lost for 12 months, it’s likely those monthly savings will fall – even with government support.
This story is from the August 2020 edition of Money Magazine Australia.
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This story is from the August 2020 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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