Saving for a baby

An addition to the family heralds a new chapter in your life, and unlike other savings goals having a child comes with a nine month expiration date. Are you financially ready?

The trick is to start early, get realistic and set a budget.

So how much does a baby cost?

If you believe what you read, some reports say that having a baby can cost as much as $10,000 in year one. However these costs usually cover just your medical expenses and set up costs. The real hit lies in the maternity leave.

Angie, mum of Xavier, says, "When we fell pregnant and reviewed our budget I realised that we would need $40,000 to enable me to take maternity leave as well as cover the set up costs of a baby. I was not comfortable in funding a baby with debt. We moved to a cash budget, cut our spending and we set up a regular automatic deposit into a high interest savings account. We made our target and the money lasted until I returned to work."

The first step is working out how much you can regularly save. Use our budget planner to work out how much you’re spending each month and where you can cut back.  Our savings term calculator will help you work out how long it will take to reach your savings goal.

Reaching your savings target

Maximise your savings by opening a high interest savings account. Our Goal Saver account offers a great variable bonus interest rate if you increase your balance by at least $200 a month (excluding interest and bank initiated transactions) and make no more than one withdrawal per month.

If you’d like flexible access to your savings, our NetBank Saver online savings account has a competitive variable interest rate and you can access your funds 24/7 online or over the phone via your linked transaction account.

Setting up a Regular Savings Plan to automatically transfer funds to your savings account is a good idea to help you save. You might also want to consider opening a joint account when you’re saving for your baby. With the two of you adding funds to the one account, you can reach your savings goal sooner.

To work or not to work?

It's something you may not want to face immediately, but being realistic about how much time you will take off work will pay dividends later. Address some simple questions: When do you plan on finishing work? And more importantly when do you intend to return? What compromises in your spending can you make during the time you are not working? Remember, bills still need to be paid while you are raising junior.

Lisa, mum of Sally, says, "As soon as we found out we were pregnant we moved to a one salary household. It's best to get into that mindset early on and it means we were able to bank the other paycheck for the maternity leave."

The costs we just don't consider

Often expectant parents zone in on the baby set up costs – nurseries, prams, car seats. The reality though is that the greater expenses come from some basic decisions. For example, how do you intend to approach your medical care? Are you going private or public? Would you like an obstetrician who can charge as much as $3000 per birth? If you're planning a baby, consider taking out higher insurance to cover obstetric costs. Many providers enforce twelve month waiting periods before you can claim the benefits so get in early.

Helping hands

When it comes to getting ready for bub's arrival, your friends and family are your best asset. Flag your interest in hand me downs early on - it's a great way to save money on important items.

Don't be shy! Ask your immediate family if they would like to gift the most important (and high cost) equipment such as prams, cots and car seats. Ask your good friends to host a baby shower and more importantly provide a list of outstanding items you need so they can steer their spending in the right places.

For everything else make sure you shop during the sales and never be afraid to ask a store to price beat. Often baby stores offer significant savings and discounts when buying in bulk so shop around and try not to buy at face value. Finally online retailers such as eBay, Trading Post and Gumtree can also be a goldmine for parents to be. Get surfing for bargains!

When it comes to being a parent it's best to set good habits early. Plan, save and revise your budgets on an ongoing basis. You'll find that for once the sleepless nights won't be caused by money worries, just teething babies.

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• Important information
  The Bank does not endorse the services and products of eBay, Trading Post or Gumtree and it takes no responsibility for the client's use of the products and services provided by these entities.  Consider your own circumstances.
  
  The advice on this website has been prepared without considering your objectives, financial situation or needs.  Because of that, you should, before acting on the advice, consider its appropriateness to your circumstances. Please view our Financial Services Guide (PDF 68KB).
  
  Terms and conditions for the transaction and savings accounts mentioned are available here or from any branch of the Commonwealth Bank. If you have a complaint, the Bank’s dispute resolution process can be accessed on 13 2221.