The biggest part of having children and making sure we can afford them is to make sure you're about as planned as you can be. Sometimes that's not possible but, for those who are meticulous about planning their future, Ben talks about going from two incomes to one household income and shares his spreadsheet information on how to save money on maternity leave or parental leave and make sure you stay ahead while you're enjoying your children.
Part one of the plan
Saving for children's costs is tricky with the high cost of living. But there are two parts to making sure you are ready to drop an income and enjoy maternity (or paternity) leave once your baby arrives without being stressed about finances.
Part one involves finding the funds for any upfront expenses. You can safely assume that baby expenses, taking into account medical costs, equipment and incidentals will be between $5000 -$10000, but of course, depending on the money you have or how much will be deducted by your private health insurance, you can flex that with a level of frugality.
To properly set goals, Ben likes to use tools like the Money Smart goal saver calculator and adjust it to suit your family, income and needs. Have a play and get a feel for what is possible with your money.
Since you might be living on one income or half pay, at this time, it's important to keep a budget to ensure you're able to save your goals. Take note of how much maternity pay you'll be getting for paid maternity leave or paid parental leave. Also, take note of government benefits or family tax benefits that you may be eligible for. Any extra money that you could put aside for use during this time will be a big help.
Part two of the plan
The second part is more complicated – what you do post maternity leave.
Ben likes to go ‘old school' and set up a spreadsheet, thankfully he shares this with us and takes us through, column by column to help us keep track.
He talks about how much money is in your bank account against your anticipated costs. You do need to know how much is going in and out so make sure you're well acquainted with your budget.
The biggest callouts Ben has:
- Continue looking back to the budget and adjust as you need
- Set priorities
- Plan ahead - don't wait for the month before you go on leave to start planning. If you can, think 12 or even 24 months
Ben Nash. Financial Adviser and the founder of Pivot Wealth, helping people invest smarter so they can create a life not limited by money.
He runs regular live online events which you can check out here. | Follow Ben on TikTok | Linkedin | Instagram | Facebook
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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.
