The cost of raising a child to adulthood in the UK costs, on average, £231,843 according to the Centre for Economics and Business Research. These are frightening figures that may leave you wondering how on earth to financially prepare for the pitter-patter of tiny feet.
The good news is that with planning comes understanding of the preparation you need. We’ll walk you through everything you need to consider to ensure you are financially prepared for the arrival of your baby.
Before they arrive, get everything in order
As soon as your baby arrives you’re going to be battling with tiredness and a huge life change. You want to be fully focused on your new family unit at that time, so try and get as much planning out of the way beforehand as possible. You need to consider:
• Maternity, paternity and shared parental leave: See our detailed article here and make sure you carefully plan your leave accordingly. Sit down and do your sums to see how much income you can expect during the first year of your baby’s life, particularly paying attention to anything additional your employer offers on top of Statutory Maternity Pay (SMP).
• Paid time-off for antenatal appointments: Know that you can safely take time off for antenatal appointments and still be paid and have your employment rights protected. Read the government webpage on pregnancy rights for more information.
• Discover if you can get extra help: There are some costs which all pregnant mothers are entitled to help with, for example free prescriptions and NHS dental care. Don’t throw money away, by knowing how to access these by reading this NHS information on free dental treatment. Additionally, there are further means of help for certain people. You may be entitled to Healthy Start vouchers or a Sure Start Maternity Grant.
• Understand benefits and tax credits: Your entitlement to certain benefits and tax credits changes when you start a family. You may discover that you are now entitled to assistance you haven’t had before. Check out what you may be entitled to here.
• Set your budget: We’ve all heard that babies are expensive, but that doesn’t mean they need to cost the earth. What is important is that you budget before you start spending. This will require willpower as cute baby outfits will be calling you, but just spend a few moments organising your budget for baby with our free Baby Budget Planner before you go on a shopping spree.
• Consider more than the first year: Yes, the first year is going to see impacting financial changes but raising a baby is about far more than that first year. From birth it makes sense to start thinking beyond first words and first steps, and think about saving for your baby’s future. There are a range of tax-friendly ways of doing this to ensure both you and your child benefit from saving such as our tax-efficient savings plan, our Junior ISA.
• Make sure you’ve covered all eventualities: Of course hopefully life will go smoothly for you all as you grow as a family. However, over the course of an entire childhood there may be times impacted by unemployment, redundancy, health problems or bereavement. These times are far less detrimental if you are financially prepared. Ensure that you have life insurance and critical illness cover. Our Junior Money Maker comes with a tax-free sickness benefit should your child become ill.
• Sign up for the freebies: Lots of companies are keen to get your loyalty and in a bid for this will provide you with freebies. By signing up to pregnancy clubs such as Bounty, you can receive support and guidance throughout pregnancy and parenthood. If you have a favourite parenting brand, then check out if they too have a loyalty scheme. Just remember to self-police your use of these and only spend within your budget even if you have money off.
• Sort out your family finances: Lastly, pregnancy is the ideal time to go through your family finances. Get free debt advice if you need to take charge of credit cards or loans. Check all of your household utility suppliers and ensure you are on reasonable rates.
Being financially prepared for the arrival of your baby will ensure that the early days are a time to simply focus on your new bundle. With preparation you will be able to eliminate many of the pre-baby money worries.