I couldn't find information on how to plan financially for parenthood, so I wrote a book

A few years ago, during the height of the COVID property boom, we finally managed to buy our own house. That same week, I started a new job and found out I was pregnant with our second child. 

It was a period full of change and adjustment. Even though we were already parents, it wasn't easy to plan for the financial impact of a second child.

The early years of parenthood are the only time in your life that you decrease your income while simultaneously increasing your expenses.

On top of that, you have to wrap your head around the complexities of childcare subsidies and parental leave payments.

Some of us, especially LGBTQI+ families, also have to navigate fertility treatments and the significant (and sometimes unexpected) costs involved.

When I started talking to other parents, each of us had our own financial challenges.

Some were weighing up the impact of taking time off work, while others were worried about how their children would be looked after if something should happen to them.

It was no surprise when I found out that Australian parents worry more about money in the lead-up to having a baby than at any other time in their life.

Why I decided to write a book about parenting and finances

For starters, it's not easy to find information about the costs of parenthood. Most of the information is scattered in bits and pieces on government websites and other parenting platforms.

In conversations, I heard time and time again the importance of sorting finances out as a family (ideally) prior to having kids.

Importantly, every family looks different, so one-size-fits-all advice isn't very helpful.

It's obvious that this is a topic that parents needed help with, so I decided to write a book. I wanted to unpack the financial impacts of parenthood and collect all the key information in one place.

Understanding the impact of taking time off work

Some of the finance books I read provided inadequate advice such as "childcare is expensive, so it may be best to have a parent stay home to raise the kids, since it's free".

First off, there are always costs associated with a parent who chooses to forgo their career for a temporary time to raise children.

Secondly, there are other considerations such as how leaving the workforce can impact career growth, earning capacity, and retirement savings of the parent staying home (typically, the birth parent).

This type of outdated (and heteronormative) advice reinforces gender stereotypes.

The 'motherhood penalty'

I was surprised to find that parenthood affects the careers of parents differently.

One study by Shelley Correll, a professor of sociology at Stanford University, found that employed mothers suffer a wage penalty of about 5 per cent per child.

On the flip side, research by Michelle Budig, a sociology professor at the University of Massachusetts Amherst, found that men's earnings typically increased 6 per cent when they have children.

While the reasons for these differences aren't clear, one hypothesis is that employers use fatherhood as a signal for "maturity, commitment or stability" in male employees.

Meanwhile, another study by Professor Correll found that "evaluators consistently ranked mothers as less competent and less committed workers than childless women but ranked fathers as more competent and committed than non-fathers".

This phenomenon is referred to as the Motherhood Penalty and the Fatherhood Bonus.

How parenthood contributes to the gender super gap

One of my biggest concerns as a parent was the hidden opportunity cost that doesn't get talked about enough: how parental leave affects my financial future.

As someone who's always been career-driven, it was hard to read the research showing that people who take parental leave, especially mothers, face discrimination at work.

One Australian study found that 60 per cent of new mothers returning to work felt excluded, ignored or that their workloads were unreasonable.

While we all know about the gender pay gap, I was surprised to learn that there is a super pay gap, too.

Research by The Australia Institute, based on median income data, found that women earn $136,000 less in superannuation over their working lives than men.

This has a significant impact on women's retirement savings.

The research found that women earning the median wage will accumulate about $400,000 in super over their lifetime — about $150,000 below what is considered necessary for a "comfortable retirement".

The lessons I've applied to my own life

Money isn't everything, and I want to prioritise spending time with our children while they are young.

To help manage the financial burden of parenthood, I negotiated flexible hours with my employer and was diligent about putting money away for retirement.

I even took on some paid work (and passion projects like writing a book) during my parental leave.

I figured it made sense for me to at least earn some money while advancing my career and putting money into my superannuation. And, because I was earning less, I paid less tax on these earnings.

We also looked into options for my partner to contribute into my super from his income (which is worth looking into if you're a parent or thinking about having children).

But due to my partner taking an extended career break due to study, and our super balances being fairly equal, we didn't pursue that option.

Parenthood is such a wild ride, but so are all the financial decisions we had to make for our family.

By arming yourself with information, you can be empowered to make the best choices for you and your family.

Ana Kresina is a 39-year-old financial educator and author living in Naarm/Melbourne. She has two kids, aged four and one. Her book, Kids Ain't Cheap, was released on October 31.