Budgeting for Baby
Feeling broody? Now’s the time to start considering the dollars and cents of adding to the family.
In an ideal world, the only currency you'd need to increase the size of your family would be love. But the reality is, the financial costs of raising a child can affect the emotional gains. However, with research and some forward financial planning, you'll be more able to manage when the time comes.
Firstly make a budget
Write down everything you currently spend over a week, from the big ticket items to the small ones. Note the areas where you could save money. Creating a budget is the first step to discovering what scenario will work best for you. Work out an average weekly/monthly spend, so you can avoid going over it. If you're planning on returning to work, are you intending to go back full-time or part-time? You'll also need to consider if it's actually worth your while returning to work at all, given the added expense of childcare. NZ parents spend on average (including childcare) over the year, up to $15,834 for a Baby (0-12 months).
Set up a savings account
The next thing to do is start saving – now! If you've gone back to work since having your child/children, take advantage of your income while you have it, and put as much money aside as you can from each pay cheque.
Pay off your debts
Then get stuck into repaying debt. Pay off any credit card or store cards as soon as you can, because even regular small amounts will make a difference.
If you have a large balance on a credit card with a high interest rate, one option to consider is a balance transfer deal. Some banks offer low or even 0% p.a. interest on the balance transferred for a certain period of time when you transfer a credit card balance you have elsewhere to them (of course terms and conditions will differ from bank to bank).
Next make a list of the essential big ticket baby items and what you can afford to pay for each
Your budget for essentials could be anywhere from $1800 to $5,500 depending on your budget and needs. Check out our list of essential baby items below with price ranges per item to help you budget for baby coming.
Bassinet - $80 - $500
Clothing - $5 - $100 per item - Here is a few tips for shopping for baby clothes. Hand-me-downs and pre-loved clothes are another way to cut costs too, as babies are always growing, the total cost for clothes over the year can be anywhere from $220 - $1000.
High Chair - $35 - $500. Get the low down on highchairs here.
Here are a few more Money-saving tips
- Be conscious of your discretionary spending and don't fall into the trap of "stroller envy". Fancy toys are nice, but leave them for Grandma and Granddad to buy when they want to spoil the little ones. Your money is better spent elsewhere. You can also find most items in good, secondhand condition for a fraction of the price of new items.
- Breastfeeding is certainly cheaper than formula, but don't forget to budget for a breast pump, bottles and associated solid food feeding paraphernalia once the baby is 6 months old. This can add up to around $1,500 over the year.
- Buying in bulk can also save you money (and many online nappy delivery services will deliver to your door, saving you the inconvenience too).
- Do your research. Scour the OHbaby! forums and ask advice from other mums about products that are good value for money. Sometimes you'll find it's actually more cost-effective to buy new and then resell on sites such as Trade Me.
- Buy unisex big ticket items such as strollers, cots and high chairs. That way you'll be able to reuse them for subsequent babies regardless of their gender.
With research and forward planning, you’ll be better able to manage your finances when your bundle of joy arrives.