Financially preparing for a baby

Welcoming a baby can be one of life’s biggest joys – but also one of its biggest financial shifts. While it’s easy to get swept up in nursery decor and name debates, spending some time planning your finances can make the transition far smoother and less stressful.

 How do you financially prepare for a baby?

One of the first things to consider when planning for a baby is how your income might change. Government support and employer entitlements can help bridge the gap, but they rarely replace your full income. Before the baby arrives, it’s important to:

• Understand your paid parental leave and government entitlements
• Factor in reduced work hours or time away from work
• Create a realistic post-baby household budget

Knowing what you’ll have coming in and what you’ll still need to cover is the foundation of good planning.

What are the upfront and ongoing costs of having a baby?

Pregnancy and early baby costs

Baby-related costs begin long before birth. During pregnancy, the average Australian spends approximately $726 on medical expenses using the public system and $2,400 using the private system, including hospital visits and prenatal care. Then, there are essentials like a car seat, nappies, formula, prams and clothes – costs that quickly add up in the first year.

Childcare costs

If you are returning to the workforce, childcare costs might come into the picture. Data from Care for Kids shows the average cost of childcare in Australia is around $139.72 per day before subsidies, making it a major line item in family budgets.

Education and long-term costs

As children grow, education costs increase. According to Futurity Investment Group, the projected costs over 13 years for a child starting their schooling in 2026 are:

• Government schools: around $113,600
• Catholic schools: roughly $247,200
• Independent schools: about $369,600

All up, parents can expect to spend between $159,120 and over $500,000 per child over the first 18 years.

How can parents manage the cost of raising a child?

While this all might seem a bit overwhelming, planning early can make a big difference and allow you to enjoy all the good things that come with watching kids grow and sharing a lifetime of memories together.

Practical steps to take:

• Build an emergency fund to cover unexpected expenses
• Reduce high-interest debt before parental leave begins
• Use budget planners and childcare subsidy calculators to estimate out-of-pocket costs and available government support

Do new parents need insurance?

With a child and partner/spouse depending on your income, insurance becomes an important part of financial planning and wellbeing.

Many parents review or arrange:

• Life insurance
• Income protection insurance
• Critical illness cover

This can help protect you if you get diagnosed with a critical illness and have unexpected medical costs, or illness/ injury prevents you from working (or returning to work). Many people consider organising insurance before the baby arrives. Some critical illness policies include female-specific and pregnancy-related cover for conditions such as eclampsia, ectopic pregnancy and certain congenital conditions.

Why planning early matters

Preparing for a baby can come with many emotions and excitement, and sometimes some financial anxiety. I’m here to help – we can plan ahead for your new arrival and get the right insurance in place to protect your growing family in the years ahead.

References:

1 https://www.finder.com.au/savings-accounts/parenting-report

2 https://www.finder.com.au/life-insurance/life-insurance-and-the-cost-of-raising-children

3 https://www.futurityinvest.com.au/insights/futurity-blog/2026/01/13/the-cost-of-education-in-australia-2026

4 https://www.finder.com.au/life-insurance/life-insurance-and-the-cost-of-raising-children