Having a baby is an exciting time, but it can also bring stress and worry if you haven't got your finances in check.

On average, it's estimated that Australian parents spend around $10,000 in their baby's first year alone, but this can be reduced significantly with good planning. The earlier you prepare your baby budget, the less of a shock it will be once they arrive.

Calculate your current income and expenses

Before you can work out how a baby will affect your finances, you need to know what your current situation is. Tracking your income and spending for 2–4 weeks should give you an accurate snapshot.

Note down what you receive from work and any other income (after tax) and subtract what you spend on groceries, bills, direct debits and other expenses, making sure not to leave anything out.

Identify areas where you can save

If you're worried that there won't be much money left over once your baby arrives, it's time to start making cuts. With so much focus on the new baby, you might find that you can do without some luxuries like magazines, subscriptions and expensive brands.

Small sacrifices you make now could add up to big savings in the long run.

Add your baby expenses

When you've got your budget down to the essentials, it's time to consider all the one-off and ongoing expenses the baby will bring and add these to the outgoings pile. There's a lot of them!

  • Everyday costs – e.g. nappies, formula, food
  • Occasional expenses – baby clothes, bottles
  • Big purchases – cot and bedding, pram, nursery equipment, car seat
  • Pregnancy expenses – maternity clothes, birthing classes, ultrasound and hospital fees

Second-hand goods and hand-me-downs can come in very handy for keeping costs down, as long as the items are in good condition.

Routine medical costs should be covered by Medicare or insurance if you're eligible and you use a public hospital, but some scans and private health costs might not be covered.

Subtract any lost income

If you or your partner are planning to take time off work or to switch to part-time work after your baby's born, this will likely mean you're bringing less money in. This can also affect your super in the long term.

Make sure you check with your employer about maternity leave and other paid leave entitlements to help tide you over. If you're worried that you need more income, you can look into ways to work part-time from home while looking after the little one.

Find out if you're eligible for government benefits

Depending on your circumstances, you could be entitled to a helping hand from government programs. Some of these include:

  • Child Care Subsidy
  • Dad and Partner Pay
  • Family Tax Benefit
  • Parental Leave Pay
  • Parenting Payment
  • Rent Assistance

Contact the Department of Human Services on 13 61 50 or visit their website to find out more about the benefits you can claim.

Reduce your debts

Don't forget about your repayments on loans, credit cards and other debts when calculating your outgoings. Missed payments can have heavy penalties, so it's important to make sure you have enough money in your bank whenever direct debits go out.

If you're struggling with debt, here are some ways you could relieve the burden:

  • Find out if you can pay off any debts early, so you won't have to worry about them later. Focus on paying off the debt with the highest interest rate first, so you'll spend less overall.
  • Ask creditors if you can extend your loan term to pay less each month. However, this will mean you pay more in the long run through interest.
  • Talk to a Debt Management Specialist about consolidating debt or consolidating payments into a single monthly payment, so you won't have multiple payments to think about every month.
  • Get an obligation-free debt assessment to discuss more ways to leave your debt behind. Call 1300 332 834 to talk to a Debt Fix expert today.