I’ve just given birth to my second child. It will slam me financially

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I’m a business owner and I just gave birth knowing it will smash me financially. It’s not as if I didn’t understand this before embarking on my pregnancy: I’ve formerly worked as a financial advisor and this is my second child.

But knowing something theoretically is very different to experiencing it in reality. Nappies, changing tables, prams, car seats, clothes… our “to buy” list is overwhelming and endless.

The reality is, no matter how much planning, saving, and budgeting you do, giving birth still bears a heavy financial impact.Credit: Greg Newington

In Australia, paid parental leave is 18 weeks. While this is miles ahead of the US’s categorically awful zero weeks, it’s still far behind Norway’s 49 weeks at full pay, or Sweden’s 480 days of paid leave.

If you are lucky enough to be with an employer that offers paid parental leave, you can get a buffer and keep your salary. But unless you’re earning well into the six figures, the eye-watering costs of childcare will quickly eat into all that you earn.

Being a business owner takes the financial impact to the next level. The reality is, no matter how much planning, saving, and budgeting you do, there is still a heavy financial impact.

You experience what’s known as a financial double-whammy – paying for your replacement and paying for your own parental leave. And that’s without considering the broader economic backdrop of sky-high inflation, a rental market in crisis, and electricity prices at stratospheric levels.

Then there’s the long-term financial impact of having a baby. Women who take time off to have a baby will experience a “motherhood penalty” as a result of time out of work, along with a hit to their superannuation – which will have ramifications long after their children have grown up and left home.

A report by treasury economists Natasha Bradshaw and Elif Bahar found mothers take a hit of about 55 per cent of their pre-birth income, with the gap hardly budging for the first five years after birth. Even among women who continued to work, their incomes were down by 5 per cent.

So, as a financial expert, what advice would I give to myself? Clearly, it’s important to plan for these potential consequences and take steps to minimise their impact on your finances.

If you’re a couple, the costs are borne by both. Budgeting should never be the job or mental load of the mother alone.

Together, get into planning mode. Make a list of the essentials that you need for your baby and prioritise them based on importance. Diapers, formula, and baby wipes are non-negotiables that you will need to stock up on. Hospital: public or private?

Business owners might be able to dip into the business and pay themselves maternity leave – but only if the business can afford it. Consider superannuation, as the government won’t pay it on top of paid parental leave.

Government benefits such as the Family Tax Benefit can provide additional financial support for families with children. You can also talk to your accountant or financial advisor about tax deductions and credits that you may be eligible for as a business owner.

Maternity pay for female business owners in Australia needs more than a shake-up. The 18 weeks of minimum wage paid parental leave offered by the government is simply not enough to cover you for the expenses that lie ahead – even with the upcoming increase to 20 weeks on July 1.

We need to increase the amount of financial support available, both directly and into superannuation. It’s one of the most impactful ways to make motherhood financially safe for female business owners who, let’s not forget, own 30 per cent of businesses in Australia.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Shivani Gopal is the CEO of Elladex and an expert in money and inclusion.

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