Some of the questions to ask when you are deciding
to stay home with the bub are purely practical.
- can you afford to live on one income instead of
two, with the additional expense of a baby?
- are you prepared to accept the lifestyle change
a reduced income will bring?
If there is any uncertainty here, the best thing to
do is to get back to basics and do a budget.
Work out how much you spend and how much you earn over
If the kids are already here, you'll be including their
costs. If baby is on its way, you'll need to estimate
some of the day to day baby costs, but don't forget,
you'll also save on dinners out and trips to the cinema,
unless you are very lucky and have built in babysitting.
Gather together details of your expenses - use past
credit card statements, bank statements, receipts and
If you are not in the habit of keeping these, you will
need to do so for at least a few months in order to
get an accurate picture of your spending.
Using the Budget Planning
Form as a starting point, make a list of all your
expenses. These will be split into:
- regular week to week 'smaller' expenses e.g. traveling
expenses, lunches, coffees
- day to day living expenses such as grocery bills
- regular payments e.g. mortgage or rent, rates payments,
utilities, phone etc
- once a year payments such as car registration and
associated costs, or home and contents insurance
- personal expenses such as clothes, hairdressers,
- others such as birthday and Christmas expenses
Often the hardest thing to keep track of are cash expenses.
If you know you take out $200 per week in cash, but
you can only allocate $170 to known expenses, just add
an extra line for $30 in other cash expenses. These
might have been kids ice creams, those $2 rides in the
shopping centre, money in a charity box or DVDs you
forgot you'd hired.
If you're not happy that you've got an accurate budget,
try keeping a diary note of everything you've spent
for a week or two. It will take surprisingly little
time and may surprise you with the outcome!
Once you have gathered all the information, fill out
a Budget Planning Form.
I have tried to include as many items as I can think
of but there will be items that are not relevant for
you and extras you need to include. Hopefully this provides
a good starting point.
Some expenses will be weekly, monthly, or one off yearly.
Put them in the relevant column and once you have listed
all expenses, convert each to a common time period.
e.g. multiply weekly expenses by 52 to get a yearly
expense. Multiple monthly by 12 to convert to yearly.
If your income is monthly, converting everything to
monthly might be most practical. e.g. Weekly to monthly:
multiply by 52 and divide by 12
Add up all your expenses per month, or per year, whichever
you have decided.
Then work out your income, remembering additional income
such as interest income or benefit payments. Click here
for info on Government benefits.
Obviously, your total income minus your expenses equals
any savings you are able to make.
If you have done this exercise using both incomes,
you can then remove your income to see whether your
partner's income alone will meet your current expenses.
What if you just cannot afford to stay home
with the baby?
Some companies have paid maternity leave, but I believe
these are still in the minority. Therefore you and your
partner need to have saved enough money to cover your
ongoing expenses during your break from work.
bonus will help with this but only goes so
far when you have all those baby things to buy.
If you are expecting gifts or having a baby shower,
ask for what you need. You don't want to end up with
excess soft toys and not enough of the basics. Or get
people to club together and give you a gift certificate
so you can buy what you need.
Do you know whether you are entitled to a parenting
payment from the government? This used to be split
into part a and part b, with part a being means tested
and part b being dependent solely on the mother's income.
The current government have changed this so part b is
also means tested, but it's worth checking it out to
see if you are eligible.