HAVING a baby is one of life's greatest experiences but can also be one of the most financially frightening.
As well as the prospect of losing one partner's wage for weeks, months or even years, expectant parents have a multitude of new costs to think about.
Clothing, nappies, food, formula, furniture and childcare are among the items that need to be considered, but experts say that planning and shopping around can result in significant savings.
According to research released this month, four out of five Australian parents worry about baby expenses, a figure which includes households earning more than $100,000 a year.
The independent research commissioned by online shopping website eBay found that 87 per cent of new parents were confused about what baby items were a necessity and what were simply nice to have.
Two-thirds of parents bought more expensive versions of baby items and later wished they had shopped around, it found.
In South Australia, the biggest cause of financial stress was that the household was going to lose one income, followed by the fact that there are so many baby items to buy.
EBay's research also found that seven out of 10 South Australian parents admitted buying expensive baby items when they knew they could have obtained a better deal by shopping around.
The main reasons given for not shopping around were difficulty and lack of time.
EBay spokeswoman Sian Kennedy said baby goods was one of the most popular categories on its ebay.com.au website, with a baby item selling every 27 seconds.
Financial planner and author of How to afford a baby, Justine Davies, said planning ahead and shopping around were the keys to real savings. ``Shopping for baby can be quite emotive - it's one of the first experiences of parent guilt,'' she said.
``Wanting to do the best for baby though, doesn't have to mean spending the most.''
About Finance director Karen Bruce, who specialises in finance and lending for women, said when a baby was on the way, the extra pressure both financially and emotionally could be overwhelming if there was no plan in place.
"So much time is spent preparing for the birth and reading about pregnancy that it is almost an afterthought that financially life is going to be very different,'' she said.
"For many couples, going from two incomes to one brings about the realisation that budgeting is essential and a little planning would have gone a long way.''
AMP financial planner Darren James said extra stress could be avoided if people thought about family planning and financial planning as going hand in hand.
"There are so many things people should consider, such as the loss of an income and the addition of hospital and specialists' bills, and health, life and disability insurances to protect their loved ones,'' he said.
BANKROLLING TIPS
Money Editor ANTHONY KEANE asks the experts for tips on making the arrival of a new baby as financially painless as possible.
NEW parents have so much on their plate - such as sleep deprivation and coming to terms with a strange little creature that completely dominates their lives - that financial matters often take a back seat.
However, failing to plan for a huge variety of new expenses - not to mention the disappearance of one income, in many families for an extended period of time - can be very dangerous.
"I think many people have a `we'll be right' attitude and in fact they won't,'' said About Finance director Karen Bruce, who specialises in finance and lending for women.
"The decrease in income and extra costs associated once the baby is born is something that needs to be well thought out and planned,'' she said.
"Budgeting is always a good idea and even more so when you are looking after every dollar. I have advised clients to live on one wage for at least eight months before the arrival of a new baby, and a change in spending habits can ensure the adjustment is seamless.''
Ms Bruce said another tip was to visit government websites to work out your income entitlements for payments such as Family Tax Benefit A and B.
"Planning a post-baby budget needs to include all the extra costs per month, including nappies, formula, baby wipes, baby food, bottles, bibs and unknown costs like chemist trips and doctor visits,'' she said.
"I would estimate at least $50 per month at the chemist, not including money for nappies and formula.''
AMP financial planner Darren James said disposable nappies for a new baby would add about $30 a week to the grocery bill, or $1560 a year, while formula for bottle-fed babies would set parents back about $20 a week, or more than $1000 in the first year.
"The importance of re-doing the budget before the arrival of a baby can't be overstated - there is a lot more to consider than a new little mouth to feed,'' he said.
"A budget is the cornerstone of good financial planning and it can relieve some of the monetary stress surrounding this life-changing event.''
"Online budgeting tools can help people consider their income and how far this has to stretch to cover all expenses. Such tools will also assist people to work out what's really important and what could realistically be put aside to cover child-rearing costs.''
Mr James said new parents should make their savings work for them, by investigating different bank accounts that paid high rates of interest but still provided flexible access to their money.
"It may sound obvious, but people should only buy the things they need and can afford,'' he said.
"Careful use of credit cards is a must. By limiting spending and paying off the balance each month, people can avoid interest charges and reduce their fees.''
Financial planner Justine Davies, the author of How to Afford a Baby, said budgets were a boring but necessary part of preparing for maternity leave.
People should list all their baby-related expenses, she said.
"Start writing down what you will need, and look at some ways to accumulate them cost-effectively.''
Ms Davies also recommended people investigate available government assistance and also check their work-related benefits.
"There are certain benefits that you will have, irrespective of who your employer is, and these basic parental leave entitlements are covered on the government website www.workplace.gov.au.
"But in addition to legislated rights, your employer, if you are lucky, may offer additional benefits such as a period of paid maternity leave,'' she said.
Another important factor in financial planning for a new family is reviewing your insurances.
"If you have personal insurance cover such as income protection you may need to advise your insurer in writing that you are taking leave,'' Ms Davies said.
"Also, now that you are going to have a family you may need more life, TPD (total and permanent disability) and trauma cover as you have your child's care and welfare to consider in the event that one of you is disabled or no longer there,'' she said.
The biggest expense faced by most people - with or without children - is their home loan, and there are several strategies that can help people navigate mortgage payments and a new child.
National Australia Bank state general manager retail banking Ann-Marie Chamberlain said the most important thing was not to over-commit yourself at the time of taking out a home loan.
"This applies equally to all home buyers, but carries even more weight if you think you will be going from two incomes to one for a period of time,'' she said.
"If your budget will be stretched to the limit, it may be worth reconsidering how much you're prepared to spend on a home.''
Making voluntary payments off a home loan before the baby arrived could also help, Ms Chamberlain said.
"If you're far enough in front, this may give you the flexibility to lower your repayments for a period of time while you're living on one income,'' she said.
"Another option is to convert to an interest-only loan. This means you will only be required to repay the interest owing on your loan, which will lower your repayments. However, home owners do need to be aware that if they are only making interest repayments, they will not be reducing the loan principal.''
