5 steps to financially prepare for parenthood

Financially preparing for a family involves more than budgeting for a car seat. Ensure you’re family-ready with these tips from money expert Irit Harris of F-Empowered.

Raising children is expensive. Trust me, I’ve had two. I wish I could say that it gets easier as they get older, but from my experience, their needs and therefore costs do rise.

Studies show that the costs of raising children have risen substantially over the last two decades and this is often compounded by:

  • Loss of income for one parent (typically the mother) for a period of time from around the arrival of the child.
  • Either higher costs (child care) and/or lower income (due to one parent returning to work part time) for some years following.
  • If this wasn’t enough, due to loss of/lower income, a parent’s superannuation may take a hit—which has led to women retiring on less superannuation than men1.

If you are a single mother, you are a bloody hero. Seriously!

Despite all this, I really do think that having kids is ‘the best thing in the world’ and so must many others. So, how can you prepare for ‘the best thing in the world’ without the financial burden? (Note: below is general advice and factual information only. Contact a financial advisor for advice specific to your circumstances.)

Before your child arrives

Tip #1 — Talk to your partner about money!

Have a conversation with your partner about money. Money is intrinsically linked to one’s values. It’s super helpful, particularly once children come into your lives, to be on the same page with your partner when it comes to money. Start by asking each other some important questions, as recommended in her article, Love and finances: Questions you should ask your partner about money by Emily Stewart for ABC’s The Pineapple Project.

Beyond the above questions, you may also want to ask the following questions specific to starting a family:

  • Who will take time off work and how much time will we take?
  • Is the parent who will continue to work willing to contribute to the superannuation of the other parent?
  • Will we send our children to private or public school?

Tip #2 — Save up for parenthood and parental leave

Start saving when you start planning a family. The amount you need will depend on how much time you’re planning to take off work, and whether you have a partner who could supplement your lost income. Some financial advisors recommend saving at least $10,000 in a high-interest earning savings account. The longer you choose to take off work, the higher this figure may be. The key is to open and start contributing to the account early and often to allow the compound interest to really work for you. If possible, before you start planning open a savings account!

To help you compare interest rates on savings accounts, use a savings account comparison site like this one (US) or this (AU). Look for no fees and high interest. 

Tip #3 — Know your parenthood budget

It’s always good to have an idea of what your budget will look like after kids, with adjusted income (normally down) and often new expenses.

From an income perspective, it’s worthwhile to check what entitlements you are eligible to receive from the government or your workplace policy, noting that these can change as your child’s education and care needs change.

I’m a big believer in working out your life goals first (and their costs). Deduct the anticipated costs from your adjusted income, and then determine additional expenses from what you have left. When it comes to spending, focus on the essentials, and also on what makes you happy!

Taking a look at baby or child expenses, like many new parents I assumed kids required lots of expensive equipment and gadgets. But having learned from my first child, there are only a few big-ticket items you absolutely need on day one, such as a safe place for the child to sleep and a safe way to transport your child (car seat and possibly a pram). You can buy everything else as you need it, and you don’t have to purchase new. Try eBay or look out for amazing Facebook pages on which parents sell their often rarely used, great quality, second-hand goods at bargain prices. And remember, you’ll also receive gifts!

What’s more, it’s a good idea not to register for AND to unsubscribe from any online shopping emails. When your child arrives, you may find yourself looking at your phone more than usual, and online shopping can be a money vacuum—do what you can to reduce the risk!

After your child arrives

Tip #4 — If you take parental leave, get your partner to contribute to your superannuation

Possibly, the main reason women retire on half as much superannuation as men is because of the time they take off work to have and care for their kids, often followed by part-time working for many years. This is obviously compounded by the gender pay gap.

So, if you have a partner, it’s worthwhile to chat about contributing to your superannuation from their income whilst you’re on parental leave (See: Tip #1), if this is possible.

Tip #5 — Make saving a habit

When you welcome kids, you’ll always be saving for something: a family vacation, child care costs, emergency fund… or all three!

In our family, we are constantly saving towards a goal. We think about what we want to achieve with our money first, and let our money help us work towards it.

For example, we have savings accounts listed in our kids’ names and every week we automatically transfer money from our pay into their accounts. One day they could potentially buy a car with that money. It’s saving without the effort, for something important we are likely to need in the future. We do the same for school fees. We have set up separate accounts named after each goal. We automatically transfer money regularly so we don’t even have to think about saving, and have our money working for us.

So, there you have it, five ways to financially prepare for becoming a parent. If you have any other tips or tricks, we’d love to hear from you! Email us at


Written by Irit Harris. Irit is the founder of F-Empowered, a platform to financially empower employees to achieve their money goals through proven financial fitness programs. Aside from being an infinite learner (over 10 years in banking, MBA, Diploma of Finance, accreditation to give general advice on banking and insurance products), Irit is a parent to two beautiful kids, wife to the incredibly supportive Josh, and lover of travel, yoga, and jogging. Follow F-Empowered on Facebook and Instagram.

Source: 1 ASU National (2017), D Hetherington & W Smith, Not So Super, For Women

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