Make a Plan

Financial Preparation for Prospective Parents

Father holding baby daughter and working from home

Having a baby can be wonderful. It can change your life in so many positive ways. You’ll love more deeply than you thought possible and moments like your child’s first words will become treasured memories. 

It’s also expensive.

It’s difficult and probably not that helpful to work out an average cost, because expectant parents’ circumstances and choices differ so much, but it’ll probably be more than you think.

When you’re dealing with the excitement of finding out you’re pregnant and trying to remember all the people you need to tell and the millions of things you’ll have to do before the baby arrives, budgeting may not be at the top of your list.

Here are some suggestions to help soon-to-be parents budget for a baby.

1. Do the maths: Having a baby will definitely add to your expenses and often reduce your income. If both parents work, you may lose some or all of one parent’s income when the baby arrives. 

Should you want to return to work, either your spouse or partner will need to stay at home, or you’ll need to pay for childcare, unless you’re lucky enough to have a relative or close friend who’ll look after the baby.

South African women are entitled to four consecutive months’ maternity leave, during which time their jobs or an equivalent job must be reserved, but employers are not required to pay some or any of their salary during this time. 

Women who are receiving a portion of or no salary from their employers and who have contributed to the Unemployment Insurance Fund can claim between 38% and 58% of their salary, up to a maximum of R12 478, from the UIF tax-free for 121 days. Expectant mothers can go on maternity leave anytime from up to four weeks before the due date.

Legally, working dads can take up to 10 days of paid paternity leave.

Once you know what the household income will be, you’ll be in a better position to draw up a baby-friendly budget. 

When you start budgeting, remember that the expenses begin before the baby is born. For example, you’ll need maternity clothes and to prepare the nursery. A suggestion is to update your budget each trimester. 

2. Check the fine print: Review your medical aid. Find out exactly what is covered and what isn’t, so you don’t get any financial surprises when the baby is born. 

It’s as good a time as any to get all your financial affairs in order. Make sure you have an up to date will, so if anything happens to you there’s provision for your baby. If you don’t have any life insurance, now may be the time to consider it. 

If all this seems a bit daunting, make an appointment to see a qualified financial advisor, who’ll be able to do a needs analysis and recommend appropriate products. 

3. Feather the nest: Start saving, ideally when you start trying for a baby or at least as soon as you find out you’re pregnant. 

Open a bank account, such as a tax-free savings account, and put away as much money as you can afford each month.

4. Shop smartly: Don’t leave everything to the last minute. Not only will this mean having to spend a lot of money at once, rather than spreading the costs over nine months, but chances are you’ll forget something important or buy things you don’t really need. 

Instead, do your research. There’s plenty of information for expectant mothers online. Once you have a basic list, check it with other mothers and refine it. Then compare prices online, so you’re sure you’re getting the best deal. 

Once you’ve got a list of essentials, buy a few items each month. 

View more tips on how to budget efficiently

5. Don’t be blinded by the bling: When it’s your first child, you’ll be tempted to want everything brand new and shiny, but cots, car seats and prams can be expensive. Often you can find good quality second-hand items such as prams online, from shops that specialise in refurbishing and reselling these items or from friends whose babies have outgrown them. 

First-time parents face a lot of unknowns. Doing some financial planning when you find out you’re pregnant may help to reduce some of the stresses after the baby is born.

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DirectAxis is a business unit of FirstRand Bank Limited, an Authorised Financial Services and Registered Credit Provider, NCRCP20. Direct Axis SA (Pty) Ltd, Reg no. 1995/006077/07, an authorised Financial Services Provider, FSP7249 & FSP5. 108 De Waal Road, Diep River 7800.

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Loan repayment terms range from 24 to 72 months. The maximum interest rate with regards to a DirectAxis Personal Loan is 24.75% per annum (compounded monthly). Your rate and initiation fee will be determined according to your personal risk profile.

An illustrative example of a loan at an interest rate of 24.75% per annum would be: Loan amount R50 000 plus a once-off initiation fee of R1 207.50 and a monthly admin fee of R69.00, over 72 months.

The total cost of the loan will be R 103 718.91 which is a maximum Annual Percentage Rate (APR) of 28.01%.