Starting a Family
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The financial challenges of parenthood

Current cost estimates for raising a child to age 18 vary widely, from $300,000 even up to $1 million. Whatever the true figure, any parent knows that it is a significant amount of money, especially if you are not prepared 
for it.

Short term financial issues

Whether the new addition to the family is carefully planned or a joyful surprise, often one of the first issues to discuss is the impact of one partner stopping work or reducing their work hours.

With the availability of government support such as paid parental leave and the baby bonus, as well as employer sponsored parental leave, it is not always a matter of moving from two incomes to one. But eligibility for paid leave and its financial benefits varies widely, making it important to assess the impact on the family’s regular income in each case.

Knowing the drop in weekly income is one thing; estimating how long it will be reduced is also important. 
A mother may be planning to return to work quite soon, perhaps for financial or career reasons. While that may restore the family income to its previous level you might need to calculate costs like child care as well.

When there are no immediate plans for a return to the workforce, different questions are raised. Apart from claiming all your Centrelink parenting benefits and tax concessions, you may want to consolidate your debts and borrowings to match the tighter budgeting.

When daily life starts to revolve around your new infant, no doubt you will adjust your family and financial priorities to deal with what life brings along. It is good to know that by sitting down with an adviser it is possible to get a head start, before your time and energy are taken up with the physical demands of parenthood.

Advisers have the experience to help you plan for these changes and work out how to make adjustments, and to assess and manage their financial impact. And if there are tax benefits you can claim, your adviser can work with your tax professional to achieve them.

Protecting your future

If you plan to have one wage earner rather than two, or to take on new costs like child care, you can review your insurance needs and cover by talking with a financial adviser, to make sure your future income stream is well protected via income protection, life and disability insurance.

By taking this approach, you will have recommendations on the most appropriate insurance policies for your situation, policies which match your needs and budget and which can be held through your superannuation fund to reduce the impact of premiums on your cash flow.

You can take advantage of the adviser’s knowledge to initiate a modest savings plan to cover the cost of your child’s education and they can calculate what you need to invest each year to reach a specific savings target.

You get a head start on the many options available by making early contact with a financial adviser. Taking this important step provides you with an opportunity to go over your questions, aims and objectives with an experienced professional so that you can look forward with confidence to the pleasure and challenges of parenthood.

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