How to prepare for a child in a cost-of-living crisis
Because kids ain’t cheap!
By financial educator, Ana Kresina
After the initial excitement (or shock) of finding out that you’re expecting, chances are that your next thought is, How are we gonna afford this kid?
Parents worry more about money in the lead-up to having a baby than at any other time in their life. For many parents, it’s the only time their income decreases (if they take parental leave) while their expenses increase. Kids ain’t cheap!
Parents are right to be worried. Research from 2021 shows that the average cost of raising two children to the age of 18 is $893,200; considering inflation, that number is probably close to $1 million now! Canstar estimates that the first year of parenting alone can cost you between $4310 and $9620, which includes anything that’s directly related to a baby, including furniture, clothes and nappies.
But don’t faint yet! There are ways to prepare for a child without breaking the bank.
Budgeting for needs versus wants
Baby stuff is so ridiculously cute – think of those tiny onesies with the buttons and the adorable baby shoes! But the chances are that those are wants, not needs. (Spoiler: babies don’t walk, so they don’t need shoes!) That’s why it’s a great idea to create a budget.
Make a list of all the essentials and put together a rough budget for the costs. You can even share your list with family and friends who may want to plan a baby shower or get practical gifts for bub.
Some baby items to budget for…
- maternity clothes
- bassinet and cot (if you’re trying to save money, just get a cot)
- mattress
- car seat
- pram
- nappies and baby wipes (reusable nappies are a great option if used long term)
- baby clothes
- high chair
- after-birth sanitary pads or period undies
- nipple pads
- breast pumps, bottles and cleaning supplies
- formula.
Budgets can keep you from overspending. Using a budgeting app can be helpful so you can see transactions in real time.
Consider some second-hand baby items
Babies don’t need much in their first year beyond a safe place to sleep, a safe way to travel, food, clothes and, of course, your love and attention. Also, chances are that most of the physical items your baby needs will only be used for a handful of months (or even weeks).
One of the best ways to consider both the planet and your wallet here is by seeking second-hand items. Of course, safety and hygiene are important, so you might choose to buy a mattress and car seat new (or second-hand from a reliable source), but many other items can easily be sourced second-hand.
Op shops, Buy Nothing groups and mum Facebook groups are all great ways to find hand-me-downs. There are often a ton of mums out there who have almost-new clothes that their kids have outgrown and they want to pass on to the next expecting parent.
Yes, you want to spoil your kids with the best and finest things, but second-hand really does save you a lot of money.
Invest time in financial literacy
One of the best ways to prepare for parenthood during the cost-of-living crisis is to invest time in financial literacy.
Finances impact every stage of parenthood, from the costs of raising a child, to the lack of income from parental leave, to the expensive extracurricular and school years, and beyond.
For parents who choose to take parental leave, understanding how that can impact your career growth, earning capacity and retirement savings is absolutely crucial. Women retire with $136,000 less in their super than men on average due to taking leave or reducing their work hours to raise children.
Having a strong understanding of how you can get ahead as a parent, even during this very expensive time in your life, will empower you to make the best decisions for your family and your child’s future.
Ana Kresina is a financial educator, author of Kids Ain’t Cheap: How to plan financially for parenthood and your family’s future and co-host of the Get Rich Slow Club podcast.
