when can you afford to have a baby? a financial planner's view
last updated: march 2026
michael churburgher is a financial planner and father of three from Sydney. he writes about family budgets, tax strategies, and getting the most out of government benefits for mini mode.
the honest answer is that there is no perfect time. there are better times, and there are times that will cost you materially more. i've sat across the desk from enough couples trying to optimise this decision to know that the people who wait for every light to turn green never leave the driveway.
what you can do is stack the odds. that means getting the PPL work test right, lining up the birth with the financial year, making sure your tenure qualifies for employer parental leave, and having enough cash to absorb the income drop without tapping credit.
here's the framework i use with clients, plus a realistic year-one budget you can adapt to your own numbers.
the PPL work test is the first gate
before anything else, work out whether you qualify for Paid Parental Leave. the Services Australia work test is strict:
- you must have worked 10 of the 13 months before the birth
- clocked at least 330 hours in that window (roughly one day a week)
- with no break longer than 12 weeks between any two working days
this matters most for people changing jobs, going contract, or taking a career break before pregnancy. a three-month gap between roles breaks the chain and you lose PPL entirely. at $915.80 a week for 26 weeks plus 12% super (from July 2025), that's roughly $26,600 of income at stake.
timing the birth: financial year and tenure
two timing levers actually move the numbers.
the financial year lever
a baby born in April, May or June concentrates your paid work into the first 10 months of the financial year, then drops your income for the final 2 months. that usually pushes you into a lower marginal bracket for the full year ending 30 June, which means a bigger tax refund and earlier access to means-tested payments like Family Tax Benefit.
a July birth does the opposite — a full-income year ending 30 June, then the low-income year doesn't start until the following 1 July. you still get the benefit eventually, just 12 months later.
the tenure lever
most employer parental leave policies have a tenure requirement — often 12 months continuous service before the expected due date. a $95,000 employee who falls one month short of their employer's 12-month cut-off misses out on (typically) 12-18 weeks of paid leave on top of government PPL. that's real money, sometimes $20,000-$35,000.
if you've changed jobs recently, check the policy before you start trying. sometimes waiting 3-6 months is worth tens of thousands of dollars.
the emergency fund rule
standard advice is 3-6 months of household expenses in an offset account or high-interest savings. with a baby coming, i push the upper end of that — 6 months — plus a year-one buffer of $8,000-$15,000 on top.
here's why: parental leave is an income shock. even with full PPL plus employer top-up, most households drop 20-40% of their gross income for 6-12 months. the buffer absorbs that without forcing you into a high-interest credit card at the worst possible moment.
| household monthly expenses | 6-month buffer | + baby buffer | total target |
|---|---|---|---|
| $5,000 | $30,000 | $10,000 | $40,000 |
| $7,500 | $45,000 | $12,000 | $57,000 |
| $10,000 | $60,000 | $15,000 | $75,000 |
financial prep checklist
six months out, work through this list:
- high-interest debt cleared. credit cards, buy-now-pay-later, personal loans. keep the HECS and the mortgage
- emergency fund at target. 6 months of expenses plus baby buffer in an offset or savings account
- life insurance in place for both parents. default cover through super is usually not enough; check the sum insured against your mortgage and 10 years of household costs
- income protection for the primary earner. ideally 70% of salary to age 65, inside super where possible for tax efficiency
- private health with pregnancy cover. note the 12-month waiting period — this one is a hard deadline
- super contributions for the primary carer. the career break is the single biggest driver of the gender super gap. a spouse contribution or the co-contribution can offset some of it
- wills updated. guardianship, executor, beneficiary nominations on super and life insurance
- PPL work test and employer leave policy confirmed in writing. do not rely on what HR said on a call
year-one baby budget: minimum viable
this is the budget i use with clients. it assumes you buy most items new but shop sensibly, and it excludes the cost of income forgone during leave (that's a separate calculation).
| category | year one |
|---|---|
| setup: cot, pram, car seat, change table, carrier | $2,500 - $4,500 |
| out-of-pocket medical (gap fees, obstetrician, scans) | $3,000 - $8,000 |
| nappies and wipes | $1,200 |
| formula (if not breastfeeding) and baby food from 6 months | $1,500 - $2,800 |
| clothing (grows out of everything) | $600 - $1,200 |
| private health premium increase (family cover) | $1,200 - $2,000 |
| utilities and grocery increase | $1,500 |
| total year one | $11,500 - $21,200 |
what offsets this: PPL of ~$23,800 gross plus employer top-up, Family Tax Benefit if you qualify, and Medicare covering most of the public-system costs. plenty of families make it work on less than the lower figure by buying second-hand and breastfeeding — the range above is for people who want a realistic planning number.
frequently asked questions
how much money should you have saved before having a baby?
6 months of household expenses plus an $8,000-$15,000 year-one baby buffer. that covers the income drop during parental leave and one-off setup and medical costs without forcing you onto credit.
what is the PPL work test in Australia?
10 of the 13 months before the birth, at least 330 hours worked, with no break longer than 12 weeks. fail any of these and you lose PPL — roughly $26,600 including the 12% super top-up.
is there a best time of year to have a baby for tax?
April-June births concentrate your income into a shortened working year ending 30 June, which usually means a lower marginal bracket, a bigger refund, and earlier FTB access.
estimate your paid parental leave
work out what PPL plus employer top-up will actually look like for your situation, and how long your emergency fund buys you.