How to manage your money before having kids

Starting a family? Here’s what you need to know to get your finances in order before your life is turned upside-down by kids.

Having children is one of life’s great joys, and watching your kids grow up before your eyes is sure to produce years of cherished memories.

Unfortunately, raising kids isn’t cheap. A 2013 study by AMP and the University of Canberra found that raising two kids in Australia will cost a middle-income family $812,000. This number includes all the expenses incurred from the time the children are born to the day they leave home. That figure rises to $1.09 million for high-income families and drops to $474,000 for families on a lower income.

That’s a lot of money, so it’s important to plan ahead and make sensible spending and investment choices. In particular, the financial decisions you make before having kids can make a huge difference to your bottom line in the future, so let’s look at the top seven tips on how to manage your money before having kids.

Tip 1: Save money

This tip may seem obvious, but saving is something every Australian should do before having kids. Kids cost money to raise and the extra expenses start as soon as you fall pregnant. You’ll need to pay for medical appointments and essential supplies like a stroller and a cot. In addition, your bills will only continue to get bigger as you clothe, feed, educate and (occasionally) spoil your children. And let’s not even start on the cost of childcare, which can be astronomical!

Having money set aside to help meet your increased budget is a sensible decision. The best place to start is to calculate a rough budget and then work out any areas where you can cut back.

Then start putting a little money into a high-interest online savings account whenever you can. Some accounts even pay bonus interest when you deposit more than a specific minimum amount each month, so setting up a regular deposit from your transaction account is an easy way to boost your savings power.

Search and compare savings accounts

Rates last updated August 22nd, 2018
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Monthly Account Fee
RaboDirect High Interest Savings Account
Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000
3.05% 1.80% 1.25% $0 $0 / $1 Go to site More
Bankwest Hero Saver
Ongoing, variable 2.60% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.
2.60% 0.01% 2.59% $0 $0 / $0 Go to site More
ING Savings Maximiser
Ongoing, variable 2.80% p.a. when you link to an ING Orange Everyday bank account and deposit $1,000+ each month and make 5+ card purchases a month. Available on balances up to $100,000.
2.80% 1.00% 1.80% $0 $0 / $0 Go to site More
AMP Saver Account
Introductory rate of 2.55% p.a. for 4 months, reverting to a rate of 2.10% p.a. Available on balances below $5,000,000.
2.55% 2.10% 0.45% $0 $0 / $0 Go to site More
AMP SuperEdge Saver Account
Link to your SMSF. Ongoing, variable 2.05% p.a. when you link to AMP SuperEdge Cash Account or a different transaction account for your SMSF in another bank. Available on the entire balance.
2.05% 2.05% 0.00% $0 $0 / $0 Go to site More
Westpac Life
Ongoing, variable 2.30% p.a. each month you deposit money, and make sure your balance is higher at the end of the month than it was at the beginning. No monthly account-keeping fee.
2.30% 1.50% 0.80% $0 $0 / $0 Go to site More

Tip 2: Travel while you still can

It’s a lot easier to take that “once-in-a-lifetime” trip you and your partner have been dreaming of when it’s just the two of you. Dealing with airport check-ins, language barriers and all the other hassles of international travel is a much simpler proposition when you’re in your 20s and don’t have a couple of kids in tow. You’ll get to go where you want to go, do what you want to do and tick all those essential items off your bucket list.

It’s also much cheaper for one or two to travel than a family of four. And by putting all your savings towards expensive round-the-world travel when you’re younger, you can start saving for some slightly more “sensible” and “grown-up” goals as you get into your late 20s and early 30s.

See the latest travel offers and deals.

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Tip 3: Pay off debt

The interest payments on any outstanding debt can be financially crippling when you’ve got a couple of young kids. While you’re trying to cope with the costs of raising a family and put some money aside for the future, you also have to contend with interest charges on your existing debt eating a hole in your wallet.

That’s why it’s a smart idea to pay everything off before welcoming a child into the world. Whether you’ve got a big credit card debt, a car loan, a personal loan or even a HECS-HELP debt, it’s worth doing everything in your power to pay it off. Look into the debt consolidation methods available and take control of your financial future.

Tip 4: Invest

For many of us, our late teens and much of our 20s is a time to simply spend whatever we earn on holidays, clothes, tech, nights out and whatever else takes our fancy. But if you manage to put some money aside to invest during your younger years, you could give yourself a financial head start on many of your friends. On top of that, any extra income you can rely on when raising a couple of kids could be extremely useful.

There are plenty of places where you can invest your money, including online share trading or in property. Alternatively, if the world of investing seems intimidating and confusing, you could consider one of the new generation of digital financial advisers known as robo advisers.

Search and compare share trading accounts

Rates last updated August 21st, 2018
Name Product Monthly Fee Standard Brokerage Fee Margin trading - Online IPOs / Floats International Description
IG Share Trading
Low brokerage fees on Australian and international shares. Earn 25 Qantas Points when you trade Australian shares, 50 Qantas Points when you trade international shares (T&C's apply).
SelfWealth Share Trading
Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size. New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
CMC Markets Stockbroking Account
Trade shares, warrants, options, EFTs, managed funds, bonds and IPOs with CMC Markets today.
Saxo Capital Markets Share Trading
Access over 19,000 Australian and global shares.
Trade US and Australian shares, options, futures and CFDs with no registration fees. Trade 24/7 on your desktop, tablet or smartphone.

Compare up to 4 providers

One option worth considering is Acorns Australia, which automatically invests your spare change from everyday purchases into a diversified portfolio of exchange-traded funds. It’s an easy way to get started if you have minimal investment knowledge and a minimal amount to invest.

Tip 5: Start a rainy-day fund

Sometimes things go wrong. Cars break down, kids chip their teeth or break bones, roofs leak and pets get sick. Fixing all of these problems could end up costing you a lot of money. Would you be able to cope with an unexpected bill of $500 or potentially much more?

That’s why it’s a great idea to start a rainy-day fund. This is an easily accessible savings account with funds to cover those unexpected emergencies. Knowing the money is there if you need it can provide much-needed peace of mind. The old saying that you can’t predict the future but you can prepare for it definitely applies here.

Tip 6: Don’t forget about your retirement

If you haven’t had kids yet, retirement planning is probably one of the last things on your mind. But it’s never too early to start thinking about how you’ll cope financially when you stop working. In fact, the sooner you start planning for retirement, the better off you will be.

Far too many Australians spend all their money on themselves in their 20s and then spend the next couple of decades putting every cent they earn towards raising their children. There’s nothing wrong with that, but the problem is that they forget to think about providing for themselves in retirement.

Getting your superannuation sorted before you have kids will mean that you’re setup for a comfortable retirement. And thanks to the power of compound interest, your super balance could grow a whole lot more than you think.

Tip 7: Set up accounts for your kids

Once your kids are born, you can consider setting up children’s savings accounts to help them learn the value of money and how to manage it. However, before they come into the world, you should look into setting up some sort of dedicated savings account to provide for their future.

For example, you might set up a savings fund to pay for their tertiary education or maybe just to be held in trust until they turn 18. Whatever your financial goals are for them, setting the account up ahead of time will ensure it doesn’t get put on the back burner when you’re busy managing all the expenses of a growing family. In addition, the balance will have even more years to reap the benefits of compound interest.

Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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RaboDirect High Interest Savings Account

Maximum Variable Rate


Standard Variable Rate

ING Savings Maximiser

Maximum Variable Rate


Standard Variable Rate

Bankwest Hero Saver

Maximum Variable Rate


Standard Variable Rate

AMP Saver Account

Maximum Variable Rate


Standard Variable Rate


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