Starting a family is a big decision for everyone – both emotionally and financially. In fact, according to one of the most recent surveys* on the subject, it costs the average Australian family more than $400,000 to raise a child.
After buying a house, having children is one of the most significant financial impacts on your life. Obviously the joy and happiness a baby brings far outweighs the financial costs, but planning ahead and budgeting will help make things easier to manage and ease you into parenthood. (Well, the financial side at least!)
When Ben and Samantha Hornery became first-time parents, they admit they were not fully prepared for the financial implications. The couple, who have two daughters – Olivia, 4, and Aurelia, 18 months – said it was a rather steep learning curve.
“To be honest, I didn’t even really consider the financial implications, so when the bills started adding up I decided to keep a record,” Samantha says. “I kept track of every out-of-pocket expense, including all the scans when I was pregnant, to setting up the nursery and having the baby. It was about $10,000.
“It was quite a significant amount of money! And I didn’t pick top-of-the-line items with the pram or baby car seat and other things. The second baby is obviously a bit cheaper, but we were still out of pocket thousands of dollars.”
Samantha and Ben have private health insurance and chose to have their babies through the private health system. Even with good insurance coverage, they were still up for a gap fee of about $3,000 for each baby.
Room to move
Apart from hospital and nursery costs, in the lead-up to having their first baby, the couple realised they would need to upgrade not only their car but also their home to accommodate their growing family. So they traded their small inner-city apartment in Brisbane for a three-bedroom house on 2.5 acres on the north coast of NSW.
“When Samantha was pregnant with Olivia, we were living in a small apartment in Brisbane,” explains Ben. “Not only was the apartment small, but it also had stairs, which we knew wouldn’t be great with little kids. So finding a new and bigger home was front and centre for us.
“We also wanted a bit of space for the kids to grow up in – with a big yard. I grew up in Newrybar on the NSW North Coast, where my family still lives, and we knew we’d get more for our money moving out of the city, so we found a place at nearby Brunswick Heads. It ended up being a bit of a lifestyle change as well as giving us more space.
“We also had to upgrade our car from a small two-door car made for zipping around the city to a four-door family car that had space for a baby car seat and pram. In hindsight, these were things we could have planned and saved for, just like we did a deposit for a house.”
But perhaps the biggest surprise of all for the Hornerys, has been the cost of childcare. After the birth of Olivia, Samantha had six months off work – partly covered by paid maternity leave – before returning to her role as business manager for a property developer part-time. Initially, the grandparents helped out with looking after the baby, which Samantha says was both an emotional and financial blessing.
However, it wasn’t long before Samantha was back at work full-time, so the couple needed to make some big decisions regarding their jobs and childcare.
“The biggest shock for us has been the childcare costs,” says Samantha. “I commute to work in Brisbane so the girls go to childcare there two days a week and it costs us $880 a month.
“Luckily, my workplace has been really supportive and my job is flexible enough that I can work from home two to three days a week. But it does mean I juggle work around the children more.”
Indeed, after the birth of Aurelia 18 months ago, the couple realised just how much of a juggling act it would be now that their family had grown to four. It prompted them to make further changes – with Ben leaving his role as a public land and design co-ordinator on the Gold Coast to start his own landscape architecture consultancy business so he could work from home and help look after the children.
“When we had the second baby, we made a decision that Samantha’s job was financially stronger than mine and she had more flexibility to work from home,” Ben explains. “So it made sense for her to continue full-time and for me to be at home more with the kids rather than putting them into childcare for extra days.
“This had a big impact on us financially. Especially initially while I was setting up my business. Things were a bit tight at times. Like most people, we have a healthy mortgage and when you throw the various costs of having kids into the mix, it does put a bit of pressure on the budget.
“The flipside is that I have had the chance to spend a lot of time with the kids – not many dads get to do that. If I didn’t do this, our childcare costs would be even higher. I can understand why people question whether it’s worth going back to work just to pay for childcare. So under the circumstances, we consider ourselves pretty lucky to have the flexibility and ability to work from home.”
The couple haven’t ruled out baby number three yet, but believe that if that does happen, they’ll be much better prepared next time around.
“Starting a family drove some major financial decisions for us, such as buying a bigger home and car,” Ben says. “Neither of which we have any regrets over, obviously. And those costs are not recurring with the addition of Aurelia or baby number three – if we go there – as we are pretty well set up now.
“And while it took me a little time to adjust to being at home with the girls, it comes with a number of benefits. Yes, we save the money that would otherwise have been spent on childcare, but it’s also a precious time for me to spend with the girls before they go to school. There are financial sacrifices we make to do this, but it’s definitely worth it.”
* National Centre for Social and Economic Modelling (NATSEM), May 2013. The cost of raising one children from birth until they finish their education.
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