Want a baby? Don't leave it too late

A new report suggests many Australians underestimate when fertility in men and women starts to decline. But if you’re putting off having baby for financial reasons, with a little planning you can prepare to welcome a new member into your family without being confronted with financial stress.

After all, the harsh reality is that women’s fertility begins to decline at 32, and the decline accelerates at age 37 so that by the time a woman turns 40, her fertility has fallen by half. So if you’re thinking of starting a family, don’t leave it too late.

The biggest concern for most new parents is how they will manage the mortgage repayments when they drop from two incomes to one – even for a short period of time.

Brad Fox, the national president of the Association of Financial Advisers, suggests talking to your lender about switching from principle and interest repayments to interest only, to allow you some breathing room while your cash flow is reduced.

“However, it should only be for a short period,” Fox advises. “Treading water is not a good long-term strategy.”

A good way to ensure you don’t fall too far behind your repayments while paying interest only is to make a one-off lump sum repayment before the baby arrives, provided you have extra money saved up. This will help reduce the principal and provide you with piece of mind while making interest-only payments.

By adding just $100 extra to an average-sized mortgage each month, you’ll build a tidy amount to redraw down the track, RateCity shows. If you can afford to keep it up you could save more than $60,000 over the life of the loan and shave four years off a 30-year term, based on $300,000 mortgage repaid at a rate of 6.5 percent.

Fox also suggests talking to friends and family with children to get a better understanding of the financial commitments that come with a newborn. This way you can budget what cuts you may need to make to cover the extra costs associated with parenthood. “You’ll be earning less for a period, but your expenses will be greater,” he says.

To reduce financial stress, Fox suggests turning to family and friends for second-hand baby essentials, such as prams, bassinets, clothes and toys. “You need a lot of equipment when you have a child,” he says. “But you really don’t need everything and you don’t need everything brand new. A baby doesn’t know that it’s not a brand new bassinet.”

Other ways to ensure you are financially fit for bub include understanding what maternity and paternity entitlements you can claim – from your employer and from the government – as well as looking into family tax benefits to ensure you receive all the financial help you are entitled to.

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