Returning to work after children

The decision to return to work after welcoming a child is a significant milestone, often accompanied by a complex interplay of emotions, logistical challenges, and, critically, financial considerations. 

For many families, the return to work signals a re-engagement with professional life and a shift in daily routines.  

Financially, it marks a critical juncture where income streams resume or increase, but new, substantial expenses – primarily childcare – often emerge.  

A proactive and detailed financial assessment is indispensable to mitigate potential financial shocks and optimise the household’s long-term fiscal health.  

This is often where the expertise of a financial adviser becomes invaluable, providing structured guidance through what can feel like an overwhelming period of change. 

Childcare costs 

Navigating the financial landscape of returning to work in Australia requires a keen understanding of both renewed income and emerging expenses, with childcare often being the most significant.  

The Child Care Subsidy (CCS) is the Australian Government’s primary support mechanism, designed to make early childhood education and care more affordable. 

There are three key eligibility criteria: the child must be 0-13 years old and not attending secondary school, immunisation requirements must be met, and the family must meet residency requirements.  

On top of this, the level of CCS is determined by three factors: their combined family income, the type of approved care their child receives, and the activity level of both parents (or the sole parent) – that is, the hours spent in recognised activities such as paid work, study, or volunteering. 

This should be accurately reported as miscalculations can lead to unexpected out-of-pocket expenses and changes in income or activity levels must be updated promptly with Centrelink to avoid overpayments or underpayments of the subsidy. 

Employer-based support 

Beyond the government subsidy, many workplaces offer employer-provided childcare support. This can range from on-site childcare facilities, discounted rates with preferred providers, or salary packaging options that allow pre-tax deductions for childcare expenses.  

Reviewing these often-overlooked benefits can yield significant financial advantages.   

Understanding the full spectrum of available support is crucial for minimising the net cost of childcare. 

The emergence of childcare expenses necessitates a comprehensive household budget overhaul. 

Reviewing your budget 

The budget developed for parental leave, focused on reduced income and minimal outflow, must now evolve to accommodate a potentially higher income alongside substantial new outgoings.  

This involves a granular analysis of projected net income post-tax and post-childcare, often revealing a surprisingly diminished disposable income, particularly in the initial return-to-work phase.  

Non-essential discretionary spending, which might have been curtailed during parental leave, should be carefully re-evaluated, considering the new financial landscape.  

It’s important to differentiate between desires and necessities, and to prioritise spending that supports the family’s core values and financial objectives. 

Crucially, the budget adjustment is not merely about managing new expenses but also about optimising cash flow and seizing new opportunities. 

With a potentially higher household income, you may like to review your savings and investment strategies. Can regular contributions to superannuation be increased? Are there opportunities to build an investment portfolio or pay down higher-interest debt more aggressively?  

Returning to work provides an ideal opportunity to re-engage with long-term financial goals that may have been paused or slowed during parental leave.  

This includes revisiting mortgage repayment strategies, evaluating existing insurance coverages (such as life and income protection, which might need adjustment to reflect increased financial responsibilities and resumed income), and planning for future education costs. 

Working from home 

Exploring flexible work arrangements can provide dual benefits: potentially reducing childcare hours and costs and offering a better work-life balance.  

This might include part-time roles, compressed work weeks, or remote work options. You should discuss these possibilities with their employers well in advance. 

Furthermore, building an emergency fund (if not already robust) is more critical than ever, as unexpected childcare closures, illness affecting parents or children, or temporary employment disruptions can have a magnified financial impact. 

Estimating the true cost of work 

The true cost of working extends beyond childcare to include increased transport costs, professional attire, lunches, and potential additional domestic support services.  

Sometimes, upon detailed calculation, the net financial benefit of returning to work, particularly at lower income levels or with multiple young children, may be less than initially perceived, necessitating a strategic discussion about career progression, future earning potential, and the non-financial benefits of working. 

Financial advisers can help with comprehensive financial modelling, creating clear projections that illustrate the impact of childcare costs and income changes on the budget and long-term goals.  

Returning to work after having children is more than just a logistical shift, it’s a profound financial pivot.  

By researching childcare subsidies, undertaking meticulous budgeting, and strategic financial planning, you can navigate this period with confidence, able to thrive both professionally and personally, securing your financial future while nurturing your growing family. 

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The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.