Time to read : 5 Minutes
Confronted by the seemingly sudden arrival of my mid-thirties, I’ve spent the last few years asking myself a question many others grapple with: should I have children?
It feels like five minutes ago I was 29 with time on my side (or so I perhaps naively assumed), but a global pandemic, a transition to self-employment, a book deal and a discovery of moderately low ovarian reserve, here I am at 34, still not changing nappies or pureeing apples.
In somewhat of a happy accident, the ovarian reserve issue helped me get my head straight on a lot of the “if” factor. Turns out when your GP reveals you might not be able to have something, you get pretty clear on whether or not you ever wanted it. Now though, I’m faced with the “whens” – great, and I thought the “if” part was hard enough!
From a fertility perspective, anyone with a uterus will know too well that you don’t always get much of a choice. Some fall pregnant on the first try – I know many people that have. For others it takes much longer.
According to the Gidget Foundation, one in six families have trouble conceiving, and one in 25 babies are born following assisted reproduction. Knowing when to start trying is tough. You have to be ready enough for it to happen quickly, but also give yourself enough runway for it to take time, and to explore fertility treatment if necessary.
But one thing you can have some control over is your financial preparation. Here are the considerations I’m making to financially prepare for the possibility of growing a small human.
Public or private hospital?
In Australia, you can either go through pregnancy and birth in the public or private system. Both offer high standards of care, and the choice often comes down to personal preference and financial capacity.
The public system gets you access to Medicare-funded ultrasounds, bloodwork and care from bulk-billed midwives and obstetricians. Going private may mean you can choose your hospital and care team. But, you’ll need appropriate health insurance, and even then, there are out-of-pocket costs on top.
Generally there is a 12-month waiting period before you can use pregnancy and birth services on your policy, so if you want to go private, you’ll need to ensure you’ve got the right health insurance well in advance of trying to get pregnant. Remember, you could become pregnant on your first try.
Be aware: while private health insurance covers your hospital stay, you’ll need to pay out-of- pocket costs on top, like obstetrician appointments and ultrasounds.
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Why you should factor in changes to your household income
Changes to your income is often one of the biggest financial pressures of parenthood in the early days. Make sure to look at what – if any – parental leave entitlements you can access, either through your employer or through the government.
This will give you an idea of what cash flow could look like when your baby is born, and how long either parent may be able to take off work before needing to factor in Early Childhood Education and Care (ECEC) costs.
Parenting finance expert and author of the book Kids Ain’t Cheap, Ana Kresina, suggests living on a reduced wage to prepare for parental leave. This gives you the room to crunch the numbers while you’re still reasonably well slept and not living a life dictated by feeding times and poo explosions.
Your household income and cash flow may also affect your borrowing power if you're looking to take out a new mortgage or refinance an existing one. It’s worth trying to make decisions around borrowing well before your household income drops. This could mean you may not have to delay your plans until you’re earning again. A mortgage broker could help you with scenario planning.
Build your emergency fund
An emergency fund is one of the most important parts of your financial toolkit – especially during a life change like having a baby.
Having access to funds when you need them can take some of the stress out of financial concerns or unexpected costs during pregnancy or the early years of parenthood.
You may decide to boost your emergency fund before the baby comes, which might require changes to your overall budget, or a redirection of funds from investments or other sources into your savings.
Consider fertility treatment costs
The costs of fertility treatment can vary by state and territory, and depend on the kind of treatment you need. Some testing and procedures can cost a few hundred dollars, whereas full IVF cycles can be up to $10,000-$14,000 per cycle.
Medicare rebates and private health insurance claims may also apply. Planning for fertility costs can be hard when you don’t know what – if any – you might need. However, it serves as a good reminder to try to increase your savings as early as you can.
Choose your life stage.
I’m looking at health cover for…
Choose your life stage.
I’m looking at health cover for…
Just me
Me and my partner
My family
Me and my kid(s)Address financial conflicts or challenges
Money is one of the leading causes of stress among individuals throughout the world. Parenting is one of life’s great challenges. When the two join forces, things can get messy.
If you’re going into parenthood with a partner, it pays to discuss your finances and your money mindset before trying for a baby.
We all have our own unique relationship with money, and that influences the way we think, feel and behave around it. Ana says, “If there is any financial conflict in your current life, there’s a good chance it will be exacerbated by having kids.” Sit down and discuss the costs of parenthood, what you want your life to look like and what you value, to identify any disagreements for discussion.
Update insurances and estate planning
Bringing children into the world drastically changes your financial responsibilities. Many of us get used to ticking the ‘no dependents’ box, but raising a child will likely challenge the way you see your assets, your finances, and what needs to happen if you’re not around anymore.
You might decide to update insurances like life, TPD, trauma and income protection, and update your will to factor in who would care for your children in the event of your death, and how you’d want your assets to be distributed.
Compare & SaveBottom line
Once you make the decision to start a family, it will open the door to a lot of important financial decisions you’ll need to make – and sometimes quickly.
With a bit of advanced planning you can better prepare for some of the costs. But one thing’s for sure, having a family will continue to give your finances a work out for years to come.
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
