Just as you save and budget for your first car or home so you need to do your sums before you welcome a baby into the family. Not only will you need to save for the long list of once-off expenses but you will also need to work your monthly budget to include all the extra costs that come standard with your new bundle of joy. We take the hard ‘work’ out of your home ‘work’ with this guide to budgeting for your baby.
Get your financial house in orderBefore we dive into the nitty-gritty, no article about baby budgeting would be complete without some mention of financial planning. This is what you need to consider at this life stage:
Savings: You need to make sure you are saving enough money, not only for your new baby but for your emergency fund and even retirement. Now is also the time to start investing monthly in an education plan for your baby.
Debt: Take a cold hard look at what you owe and pay off as much high-interest debt as you can before your baby arrives.
Protection: Lastly, you need to make sure that your family and your income are protected against illness, disability and even death with long-term insurance products like life insurance, dread disease cover and disability insurance.
Visit a financial planner and get your financial house in order before baby arrives!
Read our introduction to financial planning.
IncomeBefore you start adding up expenses you need to think about any changes to your income, for example if mom’s maternity leave is not fully paid or if mom or dad chooses to work half-day or part-time to look after the family.
By law, women in South Africa are entitled to four consecutive months of maternity leave, however your employer is not obligated to pay your salary during this time. Some employers pay a portion of your salary, whereas others do not pay a salary at all. Discuss your maternity leave and pay with your employer as early in your pregnancy as possible.
Remember that you can claim UIF maternity benefits for a maximum of 17 weeks if your employer does not pay you or pays only a portion of your normal wage while you are on maternity leave. You can expect to receive between 38% and 58% of your gross salary, depending on how much you earn. The more you earn, the lower your pay-out. Payments are also capped to a salary of just under R15 000 per month.
Visit the Department of Labour website for more information or watch out for our next blog on how to claim UIF maternity benefits.
Medical mattersPregnancy and childbirth are expensive and good medical care is essential at such an important time for both mom and baby. If you do not have a medical aid and you would like to join one, you need to do so at least three month before you fall pregnant as providers will not cover a pregnant woman and they might also impose waiting periods.
Once you have joined, or for those already on a medical aid, you need to work out how much of your pregnancy and the delivery is covered by your current plan and then make sure that you have funds saved to cover any shortfall or any expenses not paid by your medical aid.
You also need to think about cover for the new baby. Speak to your medical aid about when you need to add your newborn to your plan and find out what your monthly premium will be for him/her.
Once-off costsFrom car seat and pram to travel cots, your list of baby essentials might seem almost endless. Do some research to find out what you need and what each item will cost. Remember that a lot of what you need you can buy second-hand or source from friends and family. And of course, there is always your baby shower!
Monthly expensesYou need to factor the following expenses into your monthly budget:
- Nappies: on average you will spend between R1000 and R1200 a month on nappies, baby wipes, nappy creams etc.
- Formula: if you are not breastfeeding you need to buy formula. Excluding sterilisers, bottles and a bottle warmer, the average parent spends R400 to R600 a month on formula.
- Clothes: you need to think about clothes suitable for a growing baby and the summer and winter months ahead.
- Day care: a nanny or crèche if mom and dad go back to full-time work after a few months
Final wordWhile the thought of supporting a family might seem daunting, with proper planning and careful spending you can manage your income and expenses to give your baby the best of everything.