Expecting a child? How to prepare financially?

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The arrival of a child is an exciting event. Especially if it’s the first child! Many things in your life will change: changing diapers, lack of sleep, a new routine with daycare and/or nanny. The arrival of a child also brings financial changes. In this blog we explain what financial changes you can think of. We also provide a clear overview of the typical costs of a child and how you can optimally prepare for this.

Financial changes

The arrival of a child can change a lot in your financial life. Think of the possibility of less income if you start working less after the arrival of a child. Your costs will also increase, for example due to more groceries and spending on clothing and childcare. Read more about the typical costs of a child below.

What the financial changes look like for you depends on your situation and wishes. It is very useful to discuss this with one of our financial coaches. Contact us to find out how you can get free access to our coaches.

Costs of a child

Every child is unique. The same is true for the financial consequences of a child. There are a number of rules of thumb for the costs of a child. In the Netherlands, one child typically costs approximately 15% of disposable income, according to the Central Bureau of Statistics (CBS). Your disposable income totals all your sources of income, so including monthly salary, child benefits, holiday pay and other allowances. Two children cost on average 25% and three children cost on average of 29% of disposable income. So each additional child costs a little less each time.

But what are the costs of a child expressed in euros? Based on an average income (in the Netherlands this is approximately €3,800 gross per month), the costs of a child are approximately €80,000 from birth to adulthood (18 years). The phase from birth to completion of primary school typically costs more than €50,000. The period of high school costs on average approximately €30,000. In the event that your child goes on to higher education after secondary school, an additional €30,000 will be added on average.

Costs of a child per age bracket

The costs during secondary school and during any higher education phase are of course also impacted by a possible (side) job of your child. The location where the child grows up also affects the costs; think of living in a big city compared to the countryside.

Good financial prep work

Well begun is half done. This also applies to the financial preparations that you can undertake if a (new) child is on the way. We are happy to give you a number of tips that you can apply immediately:

• Child benefit (‘kinderbijslag’ in Dutch): the Dutch government contributes to the costs associated with raising a child through child benefit. After you have registered the birth of your child with the municipality, the municipality will pass this on to the Social Insurance Bank (‘Sociale Verzekeringsbank’ or ‘SVB’ in Dutch). You will automatically receive a letter from the SVB about 2 to 4 weeks after you have registered your child with the municipality to apply for child benefit. On this page of the SVB you can check how much the child benefit is per quarter. The child benefit is increased as soon as your child turns 6, and increased again after their 12th birthday!

• The Dutch government also offers financial support through allowances. It is recommended to do a test calculation of, for example, Childcare Allowance (a contribution to the costs that you as a working parent incur for childcare) and the Child-related Budget (an allowance that you receive on top of the child benefit). The amounts of these allowances depend on your income level. You can do a test calculation on this page of the Dutch tax authority. Did you know you must apply for childcare allowance within 3 months after your child first goes to childcare. So don’t wait too long to apply, otherwise you might miss out on the allowance.

• Clothing is one of the costs that grow along with a child. Children often grow quickly and the clothes become too small. Through apps such as Vinted or Marktplaats.nl you can easily buy nice second-hand clothes for your child for a good price. You can also sell the clothes again as soon as your child has grown out of them. So this is also good for your wallet!

• If you live together with your partner with whom you have a child (and you are not married), it is smart to get a will in place, next to a cohabitation agreement. You can do this with a notary. This is the only way to designate each other as heirs. Without a will, your child will inherit everything if you or your partner passes away, which can cause problems for the surviving parent. In case you are married and getting a child, the inheritance will be divided in equal parts between the partner and any children. This arrangement is laid down in Dutch law. With a will, you can deviate from this arrangement. In your will, you can also specify who the guardian of your child will be. A guardian takes care of and raises the child if both parents are no longer able to do so. The guardian also manages the child's finances, including the inheritance, as long as the child is still a minor.