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Budgeting for baby

Date Published : Tuesday, June 24, 2008

The impending arrival of a new baby brings with it a seemingly unending list of things to do, so much so that financial matters are often shifted to the back-burner - but experts warn that this approach can be "very dangerous", as bankrolling junior's early years requires careful planning.

For many families, the birth of a child means changes galore - including shifts household finances, the Courier Mail says. There are a variety of new expenses to take care of and many parents face these rising outgoings while at the same time losing one of their usual incomes.

As a result, planning ahead is essential in order to ensure everything is covered without overstretching the bank account.

Karen Bruce, a director with About Finance, which specialises in finances for women, said handling the increased spending - and the drop in income - is something that has to be "well thought out and planned".

"Planning a post-baby budget needs to include all the extra costs per month, including nappies, formula, baby wipes, baby food, bottles, bibs and unknown costs like chemist trips and doctor visits," she said.

Darren James, a financial planner with AMP, said there are a number of ways parents-to-be can map out how they will finance their bundle of joy.

For instances, families should make their savings "work for them" by comparing savings accounts to find the best deal in terms of interest rates and access to funds.

They must also control credit card spending and ensure they pay off the balance each month in order to avoid paying interest and higher fees.

Ann-Marie Chamberlain of the National Australia Bank said home loans also need careful consideration and, if at all possible, parents-to-be should try to get ahead on their repayments before the birth, as this could give them greater flexibility when their income drops later on.

According to the Australian Bureau of Statistics, there were 265,900 registered newborns in 2006, up 2.4 per cent on the previous year.

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