How to create a baby budget

Planning for a new family member is pretty damn exciting. Announcing your pregnancy to the world, setting up a nursery, buying tiny and unnecessary shoes, planning your matching outfits (you know you want to)… it’s a lot of fun!

But you know what’s NOT fun? Worrying about money. And that, my friends, is why it helps to create a baby budget before this little one arrives. 

Sounds like a drag? Sure, it’s not the most exciting part of preparing for a new baby, but it will help you a lot in the long run. By getting a clear picture of where you stand financially, you’ll be able to feel confident about heading into life with a baby. And it may even help you justify buying all the tiny and unnecessary shoes (within reason).

Step 1: Calculate your living expenses

Maybe you already have a solid idea of where your money is going, how much you’re saving and how much is going towards Uber Eats. If not, now is a great time to take stock, because your spending habits are about to change.

A good way to calculate your current living expenses is to write down everything you spend for a month. Every. Single. Thing. Looking back over this expense log may bring a few things to light – like how much you’re overspending on Uber Eats, for example.

The Barefoot Investor or The Broke Generation have some great strategies to help you understand your spending habits and break down your living expenses into:

  • Daily expenses
  • Fun funds (aka splurge account)
  • Savings and emergency funds.

Once you have an idea of what your necessary expenses are and what you can cut back on, you can add in your new expenses.

Step 2: Calculate your new baby-related expenses 

Your spending is likely to change when baby arrives. It may be all brunch and blow waves now, but it’s soon to be nappies and bibs (but you will be very excited about bibs).

Try to calculate what new costs you’ll have to work into your budget. Things like:

  • Pregnancy and birth costs
  • Immediate baby costs
  • Ongoing baby/child costs
  • Childcare costs
  • Changes to health insurance policies etc.

Having a baby sparks many parents to look into things like life insurance and creating a will. Have a think about that stuff, even though it isn’t fun. It’s about ensuring your baby will be looked after if anything happens to you.

Step 3: Consider how your income might change

Life with a baby may affect your money coming in, too. Whether you choose to leave your job to focus on mumming, drop down to part-time work, or put your baby in childcare while you work, there may be some income alterations to make to your budget.

Here are some income considerations for your baby budget:

  • Income changes: to you and/or your partner’s earnings.
  • Government support: if you’re eligible for Paid Parental Leave.
  • Childcare costs: and any childcare subsidies if you’re eligible.
  • Superannuation: Don’t forget about this! Super is a huge sore point for mums, because we forfeit around five working years to raise children, and often return to work part time while being the primary carers. This means women retire with around 47% less super than men. Yeah, it’s not cool. Try to think of ways to pay yourself super even if your income will be reduced. You could make extra voluntary contributions, or have your partner pay you super out of their own. Get it done, mama! It’s really important.

BONUS: Use an online budget calculator to help

What, you thought we expected you to do MATHS? Bahahahahaha! No. Never.

Take the hard work out of budgeting for a baby and jump onto an online budget calculator like the MoneySmart Budget Planner. You can type in your expenses and income, and it will do all the calculations for you (yay!).

Taking the time to create a budget before you have a baby may not be your idea of a fun Friday night. Yeah, we hear you. But it’s actually an awesome way to empower yourself as you shift into this stage of life. Money comes and money goes, but with a little wrangling, you can make it work for you when your baby comes. Oh, and check out our tips for saving money with a baby!

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