How to Financially Prepare for Children in a Cost-of-Living Crisis

The better you prepare ahead of time, the smoother the journey once you welcome your baby, writes author Ana Kresina

Whether your desire for kids has been a lifelong dream or a realisation that kicked in at age 30 when your ovaries went into overdrive, the truth remains: kids ain’t cheap. Preparation is the key to alleviating the financial stress that inevitably accompanies parenthood.

In Australia, 41% of households consist of couples with children, and given that financial problems are a leading cause of divorce (20% to 40% of divorces), it’s an opportune moment to contemplate your family’s financial future. For single parents or carers (comprising about 11% to 12% of households), financial awareness is even more critical, considering the lower average financial well-being and the sole breadwinner role.

Regardless of your family situation, proactive financial preparation offers security, allowing you to focus on the more important aspects of life—like your little ones.

Track Your Spending, Debt, and Net Worth

Initiate your financial journey by tracking spending. This practice provides a better understanding of your habits, revealing the wiggle room between income and expenses. This insight helps determine how much you can save, invest, or allocate for various goals.

Monitoring spending unveils areas of overspending (utilities), identifies where a buffer is needed (savings account), and pinpoints cost-cutting opportunities (streaming subscriptions). The goal is to enhance financial stability for emergencies or unforeseen costs, ensuring you have additional funds when navigating parenthood.

Budgeting Your Expenses

Budgeting might not be a favourite word for many, but it doesn’t have to be intimidating. It can involve simple steps like allocating a fixed amount for monthly expenses and saving or investing the rest. Alternatively, methods like setting up categories in an app or using the bucket method (popularised by The Barefoot Investor) offer structure.

Budgeting holds you accountable, revealing financial anomalies and shedding light on overspending. Increasing the gap between income and expenses is crucial in preparing for the myriad costs associated with raising children.

Your Emergency Fund

An emergency fund isn’t for everyday expenses or splurges; it’s reserved for genuine emergencies like loss of income, health issues, or property damage. Ideally, it should cover three to six months’ worth of expenses, offering peace of mind as you navigate parenthood.

Paying off Consumer Debt

Consumer debt poses a significant hurdle when starting a family. These personal debts used for household consumption, including credit card debt, student loans, and Buy Now Pay Later debt, can hinder wealth building. Tackling consumer debt is advantageous, especially after setting up an emergency fund. If substantial consumer debt exists, prioritising repayment is wise.


Investing offers the exciting prospect of your money making more money. Wealth can be built through compound interest, providing a passive income for your family’s future. If you are financially stable with surplus cash not needed for at least seven years, consider investing.

Practising Living on a Reduced Income

Once your finances are in order, simulate living on a reduced income in preparation for parental leave. For couples planning parental leave, this is an opportune time to assess the lifestyle sustainable with reduced cash flow. For singles or business owners, attempting to live off projected parental leave payments offers insight into future cash flow. Alternatively, setting aside money for ECEC payments provides a buffer and foresight into future costs.

Adequate preparation eases the transition to parenthood. The better you prepare ahead of time, the smoother the journey once you welcome your baby.

This is an extract from Kids Ain’t Cheap by Ana Kresina, a financial educator and author, offers valuable insights in her book, “Kids Ain’t Cheap: How to plan financially for parenthood and your family’s future,” as well as on the Get Rich Slow Club finance podcast. Available from directly from Major Street Publishing RRP $32.99