How much money will you need to have a baby?

I wrote my Money and Babies blog last year. Since then, a lot of things have happened including falling pregnant with my first child! Whilst I count down the days to the 'big day' I’d like to share with you a formula and tips that aim to help you plan for the 'financially' expected, and unexpected. This way you can feel comfortable knowing you can afford that babymoon and maternity massages!

Calculating how much you’ll need to save

  1. For the year of birth, use a budget to estimate what your increased expenses may be and the reduced net income. Denote surplus annual cash flow as ‘A’ (-A if it is a cash flow deficit)

    Budget planner

    ATO PAYG tax calculator

  2. List what you need (furniture, baby clothes etc) by chatting to friends who have kids or searching for lists that are online. Estimate these costs and denote them as ‘B’

  3. Costs to host a baby shower. Denote costs as ‘C’

  4. Decide whether to have your baby via the public or private system.

    I am surprised by the out of pocket expenses so far incurred by both public and private system patients in the ACT. Ultrasounds, doctor appointments and blood tests that were not covered by Medicare have cost us $1,400 so far at 33 weeks pregnant. Estimate how much you think these costs will be for you and denote these costs as ‘D’

    Include costs for the Private System, if you choose to go privately. We decided to go via the Private System with our out of pocket costs totaling between $6,000 and $8,000 based on our obstetrician and our situation. This is on top of the Health Insurance premiums. Estimate how much you think these costs will be for you, and denote these costs as ‘E’

  5. If you would like to go on a 'babymoon', denote this cost as 'F'

Estimated savings required= B+C+D+E+F-A

You may like to include a buffer by increasing this by 10%.

What else to consider?

  • Review your mortgage. You may like to consider a fixed loan or interest only to help with your cash flow, if need be. Deanna from More than Mortgages in Canberra will be more than happy to help.

  • Use passive income from positively geared investments (or your business) to help supplement your cash flow when your employment income reduces during maternity leave.

  • Start saving. If you have less than 2 or 3 years to save, open a high interest savings bank account. If you have more than 3 years you may like to consider investing in a portfolio to help grow it faster. An example is a managed fund or ETF. Your financial adviser can provide further advice on the portfolio right for you whist considering risk, return, investment time frame and diversification.

  • Understand your 'adjusted taxable income' (ATI) for Government payments as it isn't what you earn in take home pay. It includes investment losses (such as negative gearing) and capital gains from selling property and shares. It also includes certain superannuation contributions and salary packaging.

    • If your ATI was more than $150,000 in the previous financial year, you may be ineligible for the Government’s paid parental leave scheme.

    • Child Care Subsidy reduces to $0 once the combined household ATI exceeds approximately $350,000 or more.

  • You can work for 10 days whilst on unpaid leave, called ‘keeping in touch days’. This can help with your cash flow but also help you stay engaged with your work and colleagues.

  • Review your personal insurances. You may need more trauma insurance, life and total and permanent disability (TPD) cover to cover extra expenses associated with raising a child if one of you die or becomes seriously ill or disabled. 'Agreed value' income protection cover may also be an option if you intend to take leave without pay or go part time.

    • TPD and income protection may be unavailable to Mum's-to-be in the later stages of pregnancy and on maternity leave.

  • If you feel uncomfortable talking about money at home, your financial adviser can give you the time and place to feel comfortable taking about it. We can also keep you accountable to stick to your financial plan.


Gianna Thomson and Thomson Wealth Pty Ltd ACN 626 920 161 trading as Gianna Thomson are authorised representatives of Fitzpatricks Private Wealth Pty Ltd, ABN 33 093 667 595, AFSL 247 429. This is general information only and does not consider your personal circumstances, needs and objectives. It is important you seek advice from a professional financial adviser prior to making any decisions.