Top Financial Tips for Expectant Parents

Posted: Monday March 23 2020

By: Lisa Vaughan

Becoming a parent is likely to be one of the most life-changing events that anyone is likely to experience during their lifetime.  One day you’re living life with the freedom to do what you want and then suddenly you have this beautiful little person, who depends on you for everything.

Top Financial Tips for Expectant Parents


Having children is expensive.  According to the Child Poverty Action Group in March this year, it is estimated that the total cost of raising a child from birth to age 18 in the UK, is around £150,753 for a couple and £183,335 for a lone parent.  Preparation is key, so take time before baby arrives to consider the financial changes ahead.  If you want to minimise stress down the road, consider these top tips when planning your new financial future.


Budgeting

Finances might be stretched for a while as your budget is hit in two ways.  Your household income is likely to suffer a reduction as a result of parental leave and reduced working hours.  You’ll also have an increase in costs, such as equipment, nappies and food, but one of the most significant costs for most is childcare. This significant rise in cost and reduction in income is a double hit on parents.

Work out what your income is likely to fall to after baby arrives and then work out what money you have left after your regular bills are paid. Then take account of any new regular expenses associated with your new baby and see how much you have left each month.  If money is tight, try shopping around for better deals on things such as utilities, insurance, broadband or telephone might help to free up more cash.

 

Future plans

Think about how long you would like to be off work and understand how much you’ll get paid while on parental leave, from your employment or statutory maternity pay.  Consider when you would like to go back to work, whether you want to continue to work the same number of hours and if your employer will be supportive of this.

Do you have big plans on the horizon, such as getting married or buying house? Consider if the additional costs associated with having a child could impact these plans.  For example, if you’ve saved some money towards a house deposit, will you need to dip into this in the short term when your income has reduced? Are you happy to delay the purchase of a house, or to perhaps look at buying a property at a lower value to reduce the deposit amount required?

It will be tough to save for large expensive life goals at the same time as dealing with the additional financial pressure that a new baby can bring, so think about what is important and prioritise what is most important to you right now.

 

Prepare

Before the arrival of children, you may be in a comfortable position financially and then all of a sudden you find your budget becomes tighter, which may come as a shock.

Save, save , save as much as you can while you’re in a comfortable place.  Having savings will help to offset any future increase in costs, reduction in income and give you peace of mind later.

Consider reducing debt where possible, especially the most expensive ones like credits cards, store cards and loans.  If your debts are reduced, the more money you will have to save.

 

If you think you might not want to rush back to work, getting your finances in order and saving money in advance will help you to accommodate this plan, rather than being forced back to work sooner than you would like because of financial pressures.

 

If you let money determine whether or not you have children, you might never have them! 

 However, some financial forward planning will go a long way towards making things a little easier later.

Top Financial Tips for Expectant Parents