The months before your baby is born are exciting, wonderful… and expensive. The average parents-to-be spend £2,000 before the baby even arrives.
Add in all those unexpected expenses – not to mention the fact that one of you is on maternity leave – and managing your finances and coping with a new arrival can seem quite daunting.
But with a bit of planning, it is possible to ‘baby-proof’ your finances – leaving you with time to enjoy those precious early days with your little one.
1. Work out how much your baby will cost…
The first thing to do is to work out how your budget will be affected by your new bundle of joy (spoiler: it won’t be improved!)
The average parents-to-be spend £2,000 before the baby even arrives
It can be hard to work out what a baby will actually cost during its first year. Luckily, this nifty baby costs calculator will help you quickly work out what costs you’re likely to face.
2. …then work out your total budget
While drawing up a budget might sound as much fun as pulling teeth, we guarantee that it will:
a) help save you money, and
b) significantly reduce your stress levels.
We show you how to create a family budget in under 30 minutes. With our interactive budget tool, you don’t need a spreadsheet or even a pen and paper – you’ll have your finances sorted in less time than it takes to watch an episode of Corrie.
3. Cover your basics
If you’re working, make sure you take the following things into consideration:
- Your maternity pay
- Maternity Allowance (if you’re self-employed)
- Employment and Support Allowance (ESA) if you’re unemployed
- Child Benefit
- Other benefits for new and expectant mums (such as free dental care and free prescriptions.)
You can claim Child Benefit as soon as your baby arrives, which is worth £20.30 a week for your first child and £13.40 a week for each of your other children. (If you or your partner individually earns over £50,000 pounds a year, you will receive less Child Benefit however (see the details here).
Top Tip: Have a look at our round-up of maternity and family benefits. Many of these benefits are NOT paid to you automatically – it’s up to YOU to claim them.
Make sure you’re not missing out on money that you’re entitled to!
4. Start saving
Try and get your household budget down by making sure you are paying as little as possible for basics such as broadband, gas and electricity. Have a shop round comparison sites, or contact your existing supplier to check you are on the cheapest tariffs.
Make sure you know what help is out there for cutting your childcare costs.
You might also want to switch your bank account so you get a decent rate of interest if you are in credit, or a better overdraft rate if you are in the red.
Make sure you know what the best ways to save money on your shopping are – they can really slash your costs.
There are other things you can do to make sure you are not throwing money away. Families waste a third of all food they buy. LoveFoodHateWaste has lots of tips on using up leftovers. The average family can save at least £10 a week; that’s £400 over nine months.
Top tip: Got debts you can’t seem to shake off? Make sure you read how to get debt-free in 10 simple steps.
5. Now do the maths
Take your household budget and subtract it from your household income. Hopefully you will have some spare cash left over. (If you don’t, you either need to re-budget or get out of debt).
Any spare cash from your pre-baby budget needs to be put into an accessible savings account paying a good rate of interest. (Rates change, but these are the best savings accounts at the time of publication).
In fact, it’s worth considering making two budgets:
- Your pre-baby budget, which uses your current income;
- Your new family budget, which is based on your post-baby income. (Remember you can work out what your baby will cost with the baby costs calculator).
Your post-baby budget is a good reminder of what you will be living on when you become a family, so again, make sure you claim what you are entitled to.
6. Get all you can – for free if possible
Ask friends and family if they’ve got any baby outfits or equipment they no longer use. (It’s also worth asking other parents what baby equipment they actually found useful, and what stuff they never ended up using).
Then check Freecycle.org to see if other local mums in your area have any baby clothes, or larger items like cots that they no longer need.
You can also go to your local NCT Nearly New Sale where you can pick up nearly new items such as travel systems for a fraction of the cost.
You might also want to put in a word at local charity shops and ask them to put aside and relevant baby bits when they come in – so you have a whole bag of baby clothes to choose from the next time you visit.
Now is also a good time to try and stock up on cheap nappies, bedding and clothes.
It’s also worth keeping an eye on our best freebies article, which is updated weekly.
7. Take a break from repayments
Ideally try and pay any credit cards off before you go on maternity leave; if that’s not possible you may be able to switch to one that offers you an interest-free break. (Find out how you can avoid paying interest on your credit card debt for TWO years or more here).
The same goes for some mortgages. If your mortgage company doesn’t offer repayment breaks, this it may be worth asking anyway. Another option is to reduce your payments by going interest-only for a few months.