Starting a family: financial considerations to make before having a baby

All Australian employees are entitled to parental leave. But, like most
entitlements there are criteria.
If you’re in a couple, it may pay for each of you to ask about any employerfunded parental leave pay. This will be in addition to what the Australian
government provides and could be in the form of regular wages over a
period of time or a once-off baby bonus. You can also ask about unpaid
leave entitlements.

Next, read up on the Australian government’s Parental Leave Pay and Dad
and Partner Pay. They each pay the weekly rate of the national minimum
wage, which is currently $772.55 per week1
. If you’re in a couple, this means
you may be able to get a total of up to 20 weeks of payments to support
your family when bubs arrives.

It’s probably no surprise that childcare spending varies a lot between
families.
How much you spend depends on the type of care you choose, how much
care you need each week, the hourly or daily rate charged by the provider
and how much the Australian government will contribute towards your
childcare fees (the Child Care Subsidy is means-tested and will depend on
your family income).
Before you shortlist your options, you may want to check if you’re eligible
for all or part of the Child Care Subsidy

Next, you could make some calls and schedule visits to get a feel for the
type of service you need.
You may be surprised to learn that some childcare services have long
waiting lists but allow expectant parents to register their child before
they’re born.
Finally, consider locking-in a childcare arrangement as soon as possible

A family budget could be the best thing you do.
It can help you predict all the new incoming costs (e.g. baby products and
clothes, babysitting, childcare and early education, and children’s activities).
Best of all, it may give you a sense of control over finances and stress!
To create a budget, you need to consider all forms of income you have. This
includes any government assistance you may be eligible to receive such as
Parental Leave Pay, Child Care Subsidy, Family Tax Benefit Part A and Family
Tax Benefit Part B.
Visit the Moneysmart website for tips on how to do a budget and use their
budget planner to create your family budget

The Government Co-contribution is available to all eligible Australians but
may be particularly helpful to someone who is planning a career break.
If you (or your partner) are earning less than $56,112 in the 2021/22
financial year and make personal (after-tax) contributions to your super,
the Australian government may also make a contribution (called a cocontribution) up to a maximum amount of $500.

Considering that employer super contributions stop when you’re not
receiving an income, this could help your super savings in the long-run.
Eligibility depends on your annual income and how much you choose to
contribute. You can estimate your government co-contribution with the
ATO’s Super Co-contribution Calculator

If you or your partner are taking a break from work (or reducing your work hours) to raise your family, there are ways to support the stay-at-home partner and make the most of your financial situation.

For example, you can top up your partner’s super with a spouse contribution and potentially save up to $540 on your tax bill in the process[1].

This involves contributing to your spouse’s super using after-tax dollars.

Provided you meet the eligibility criteria, and your spouse’s income is $37,000 or less, you could receive the full tax-offset of $540. This amount reduces when your spouse’s income is greater than $37,000 and phases out completely when their income reaches $40,000.

When you become a parent you become a provider too. If, for whatever
reason, you’re unable to earn and provide, your insurance cover could
provide a financial safety net for your family.
The challenge is working out how much cover you need once you have
children in tow. This usually depends on how much money you may need to
pay for certain expenses like education fees for your children, the mortgage
on the family home, funeral expenses, and paying off loans and other debt.
And if there is a stay-at-home partner in your family, don’t dismiss
insurance cover for them.

There’s a misconception that insurance is for income earners only, but that’s
often far from the truth. A stay-at-home parent does many jobs – many of
which would be very expensive to outsource if they weren’t able to perform
them.
If reassessing your insurance needs seems daunting, consider seeking
expert advice (see Step 7)!
At Super SA we have insurance fact sheets that can help you to
understand everything you need to know about our insurance products.
This includes Death Insurance for spouse members in a Triple S or Flexible
Rollover Product (FRP) account.

It’s sensible to check in with your financial adviser whenever you’re planning something big (and starting a family qualifies!). They can help you reassess your current situation and goals for the future. They can also help you work through your insurance needs.

 

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