I had always been told that come a certain point I would be thinking less about late-night cocktails and more about late-night bottle feeds. I’m afraid to report that this year as I spend more time around young families and my two adorable nephews, it’s happened.
Whatever magic baby button is in my head; it’s been switched on.
This has sparked a number of conversations with friends around planning for a family and parental leave. You only need to have been near an expecting mother for a few hours to quickly learn the enormity of information thrown at you before and during your pregnancy.
It has struck me that very little of this information relates to the financial impacts of starting a family. The considerations couples should have many months prior to the arrival of a new family member.
How long can we afford to take off work? What costs should we be provisioning for? Will we get any support from the Government? When do we need to start saving for this new addition and how much will it cost?
I am lucky that as part of my role in the PW Dream Team is to provide clarity and insight on these exact issues for our members. Personally, it gives me comfort and also a dose of reality around the financial discussions my partner and I need to have when we decide to start a family.
So for anyone planning to start a family, support a friend through their journey or future aunties/uncles/grandparents; here’s our baby plan checklist.
What’s your time frame?
Whether you are strict planners with a couple of years ahead of you or more relaxed in your thinking, it’s important to consider roughly how long you have to provision financially.
What support does your workplace provide?
Maternity and paternity leave benefits can vary greatly between workplaces. If you are unsure of your benefits, rustle up your original contract or your employment award to confirm your entitlements.
How much time do you wish to take off from work?
This is a completely personal preference; so note down ideally how long you can take away from work. Also consider if you will return to work part- or full-time.
What expenses do you wish to cover?
There are different ways to look at this, however we would usually consider the following with our members;
- use net annual income for the parent taking time off, or
- calculate your current expenses and the shortfall between this and the net annual income of the parent remaining at work,
- consider additional costs for new baby, or
- in the case that all current expenses are met by the parent continuing work, is there an extra amount you wish to provision for?
Are you eligible for Government parental leave?
The eligibility requirements and amount payable vary, so it’s best to check directly with Human Services on current rates. More information can be found here.
Once you know the level of expenses you wish to cover, how much of this is funded by work entitlements or the parental leave scheme, you can determine the portion you need to fund through savings. Thinking back to your time frame, some quick division will determine how much you need to be putting away on a regular basis.
Often for our members, getting to this point is the easy part. Once you have numbers in mind, the difficulty lies in prioritising this goal above other things like lifestyle spending. We find however that where there’s a will there’s a way; and we can always find a compromise or solution.
The good news is this is the relatively boring part of starting a family. Whether you do this yourself or use the PW Dream Team; getting the practicalities out of the way early makes the whole journey even more enjoyable.
The above is general advice only and does not consider your specific circumstances. If you wish to discuss how we can assist you plan for the next exciting stage in your life, we would be delighted to hear from you.