July 25, 2016 A parent’s guide to family benefits for your newborn
Clichés usually exist for a reason and that’s because more often than not, they’re true.
And the adage that nothing can prepare you for what having a baby is really like is absolutely true.
Newborns are notoriously unpredictable and much of your early days as parents will be a frantic blur of feedings, interrupted sleep, constant doctor visits and all manner of baby poo.
With this, I recommend you and your partner embrace the chaos of the first few weeks and months.
I write this not to scare all you expectant parents, but just to highlight that the chaos that will characterise your immediate post-baby lives will settle down, and you and your baby will eventually find a routine and rhythm to your day to day.
However, imagine being able to put into place some financial systems before your baby is born, when you actually have the time!
When he or she does arrive, you can concentrate wholly on getting to know your new wee bundle of joy.
There’s been extensive research into tracking exactly how much it costs to raise a child until adulthood and quite frankly, it’s a pretty eye watering amount.
According to the 2013 NATSEM report on the cost of raising children, jointly researched by the University of Canberra and AMP, you’re likely to be out of pocket in the vicinity of $406,000 per child until they turn 21. This equates to around $19,300 per year right from birth. It’s enough to scare any prospective parent.
Thankfully, however, with the right planning and some forethought, there are things you can do to help ease the burden of this – even offset the costs, at least in the first 12 months.
Did you know that there are eleven different government parenting payments?
Or that claiming the three most common federal government entitlements could pay you around $20,000 in your baby’s first year?
In the early days, worrying about money is completely understandable, especially when one of you isn’t working. So imagine having the ability to alleviate at least some of the financial pressure if you and your partner claim all your eligible parental payments.
If you’re wondering about how you’d go about claiming all your entitlements or you’re looking for some tips on making positive financial decisions to benefit your family, read on.
A parent’s guide to family benefits for your newborn:
Paid parental leave pays you while on maternity leave
You’re likely familiar with the federal government’s Paid Parental Leave scheme.
It was introduced in 2011 and principally designed for mothers to ensure they can spend the first few months at home with their new baby without being too financially disadvantaged.
If you’re eligible, you’ll receive the parental payment for a maximum of 18 weeks’ at the National Minimum Wage, which equates to about $672 per week (correct as of July 2016). This equates to a little over $12,000 pre-tax.
In any event, dealing with Centrelink (and negotiating their rather temperamental website) can at times be a pretty time-sapping affair.
I’d recommend claiming your Paid Parental Leave before your baby is born – you can claim up to three months before – so after your newborn arrives, all you need to do is submit the final bits of paperwork.
The main thing is to ensure that the transition between your paid work and the leave payment is relatively smooth.
Dads and partners get paid to spend time with their newborn as well
While Australia is a fair way behind our Scandinavian counterparts when it comes to paternity leave – a whopping 85% of new Swedish dads take paternity leave there – the federal government introduced the Dad and Partner scheme in 2013 to try to help dads to stay at home for the first few vital weeks of their new baby’s life.
Just make sure you’re not paid from your employer for the time you’re on paternity leave.
Can you afford to go back to work?
Say you decide you’d like to return to the workforce, you’re likely going to need childcare of some sort.
If you’re lucky enough to have close family look after your child, that’s a boon for you.
However, like many Australians, you might be on the hunt for professional childcare.
In Victoria, the average cost of centre-based childcare is between $80 to $120 per day. My local child care centre, which has a waiting list to get into, charges a whopping $140 per day. Our little girls are in there two days per week and they love going, but it has added more than $29k a year to our expenses – ouch!
Unfortunately, the bad news is that the costs will just keep rising.
Parents pay, on average, 37 percent more for childcare now than they did in January 2012. You can imagine that for those with kids in childcare, any financial assistance to offset this hefty expense is welcome!
The childcare subsidy is intended to help parents go back to work and is calculated based on your family income and how much you work as well as the type of childcare service your little one is in.
If your claim’s successful, you’ll be eligible for a rebate for each child you have in approved childcare and receive up to 50% of your out of pocket child care expenses paid up with no annual limit.
This takes some of the sting from of the cost of child care. In our case, it allowed my wife to go back to work.
If you and your partner can claim all three parenting benefits to its maximum amounts, you’ll receive financial assistance to offset the costs of raising your baby to the tune of almost $21,000.
- Paid Parental Leave – $12,000
- Partner Pay Scheme – $1,300
- Childcare Subsidy – let’s say $7,500, however, this will vary from family to family depending on how the childcare subsidy is calculated for your family.
Claiming the maximum benefit you can will really help get you started.
. Of course, to chat more about preparing for your family’s future, email me or schedule a call below.
Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us 🙂 ) when making a financial decision.