Double, double, toil and trouble: the true cost of twins

Having a baby can be one of the most exciting – and expensive – times in your life. But just because you’re having twins doesn’t mean the price tags should multiply as well. 

RateCity research has examined the biggest sources of financial stress for new parents and how you can cut down on expenses while making the most of the help available. 

Bigger Car:

For many parents of twins, you may notice that your humble, two-door car is looking rather toy-sized when you consider fitting two car seats and a duel pram in it. That’s why one of the more expensive items you’ll need to buy is a bigger car.

Websites like carsales.com.au or carsguide.com.au are a great resource when shopping around for a car. They also have a huge range of used cars, which would be a more economical choice when you’re budgeting for twins.

It also pays to compare the most economical car loans. Avoiding paying monthly fees or large upfront fees will also save you big in the long run.

Three car loans without monthly fees:


Baby Basics: 

If you’re not lucky enough to have a baby shower, or if you aren’t gifted every item your twins need, you will need to buy all your baby things.

 It can be tempting to buy everything new, however you can save thousands just by shopping second-hand. Websites like gumtree.com.au or buy, swap sell pages on Facebook can be a safe and reliable resource for savvy shoppers. 

Example:
A new Valco Baby Snap Duo Pram can set you back $499. RateCity research found a second-hand version of the same stroller for $220 in great condition on GumTree.

istock_79305201_small5

Loss of income:

One of the scariest parts about having a baby is the realisation that one or both parents will have a period of zero income. Luckily, the Australian government provides families with paid maternity leave and newborn and child care rebates.

And as twins have a shorter gestation period, maternity leave will need to be taken earlier than that of a single child pregnancy. According to the Fair Work Ombudsman:

  • Eligible employees who are the primary carer of a newborn or adopted child get up to 18 weeks’ leave paid at the national minimum wage.
  • These payments are made to the employer first, who then pays them to the employee. These payments can be paid before, after or at the same time as other entitlements such as annual leave and long service leave.
  • Parental Leave Pay from the Australian Government doesn’t change paid parental leave from an employer – an employee can be paid both.

Unfortunately, employers are not obligated to pay employees maternity leave. If you are lucky enough to work for a company that does, this will be stated in your employment contract.

What about dads and partners?

Dads and partners (including same-sex partners) receive 2 weeks paid leave at the national minimum wage.

The Australian government also provides families with child care benefits. These can assist with the costs of approved and registered care, such as long, family or day care, outside school hour care, vacation care, preschool and kindergarten.

According to the Australian Department of Human Services, (ADHS) the current approved care rate for a non-school aged child is $4.30 per child per hour, or $215.00 per week. Payment rates for school aged children are 85 per cent of the non-school aged rate.

You can also receive additional Newborn Upfront Payments for multiple births. ADHS advises that you may receive the following for each child:

  • Newborn Upfront Payment, as a lump sum of $540, and
  • Newborn Supplement, at a maximum rate of $1,618.89 if you are eligible for the whole 13 weeks, even if you already have other children.

Spouse Super Contributions

istock_79305201_small5

Something else to consider is that if you or your partner will be taking time off work, then you will not likely be receiving super entitlements from an employer.  

However, did you know you or your partner can make a spouse contribution to the other’s super account, or arrange for contribution splitting? 

According to Industry Super Funds, spouse contribution allows the working partner to claim an 18 per cent tax offset on super contributions up to $3,000 that are made on behalf of the non-working or low-income-earning partner. More than $3,000 can be paid, but the working partner would not be able to receive the spouse contribution tax offset.

Contribution splitting is another option you can choose to support a spouse’s super. If the non-working or low-income-earning partner is under 65 years and not retired, the working partner can split their super into their super account. These can only be split at the end of the financial year, and some super funds may charge a fee to do so.

Did you find this helpful? Why not share this article?

Advertisement

RateCity

The money talks which you don't need to avoid any more

Subscribe to our newsletter so we can send you awesome offers and discounts

Advertisement

Learn more about savings accounts

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.