Expecting or just welcomed a tiny human and wondering how your bank balance is going to cope?
Becoming a new parent is brilliant, overwhelming and utterly life changing. You get endless cuddles, a dramatic new sleep schedule and a list of expenses that seems to grow overnight.
But breathe easy. With a few sensible financial tweaks and a bit of planning you can keep your family on solid ground without crying into the takeaway tonight.
In this post we will run through the key money matters new parents should sort, from saving for future schooling to making sure you are covered if life throws a curveball. Think of it as a friendly financial checklist for new parents that won't judge your chosen brand of baby wipes.
Financial Moves New Parents Should Make
Congratulations, you're about to become a sleep-deprived money manager. Having a baby changes your wallet faster than you can say nappies. Here are the bits to watch out for.
New Expenses
From nappies and formula to clothes, toys and gadgets you never knew existed, a baby brings a whole new shopping list. Some things are essential, some are brilliant marketing. We will dig into the essentials and help you spot the fads.
Changes to Income
One or both of you might take time off work to look after the little one, meaning less pay coming in. Maternity and paternity pay can help but they rarely cover all the bills. Best to plan for a quieter bank account and a louder baby.
Future Planning
Think about your long-term goals like saving for school, a deposit on a house or retirement. It is easy to underestimate how much your life flips in those first few weeks with a newborn. A bit of forward planning now means fewer panicked conversations later.
Being clear on your goals will help you and your partner stay on the same page, so any spare cash goes to agreed priorities and not to yet another novelty onesie. Celebrate the small wins and keep the receipts.
Financial Checklist after having a baby:
Creating a Budget: Managing Your New Expenses
Congratulations, you tiny human wrangler. A new baby brings a lot of new expenses and fewer nights of uninterrupted sleep.
Best thing to do is make a list of what you now need to pay for and what might pop up unexpectedly. Work out how much you will need each month and stack that up against what you have coming in so you do not blow the budget on fancy nappies before covering the essentials.
Split your outgoings into definite monthly bills and possible surprise costs so you are ready for both routine life and the delightful chaos that babies specialise in. With that in mind, the next couple of points will help you pull together a budget spreadsheet you can actually stick to.
Think of it as a financial baby checklist to keep the panic to a minimum and the savings to a maximum.
Here are some checklists and bits of spending to consider as you plan your new normal:
- New baby hospital bag checklist
- Breastfeeding Essentials for new mums
- New Baby essentials gift guide
- Preparing for Twins - what do you need?
- Essential post birth must-haves
Set Up An Emergency Fund
Babies are lovely, but they are also tiny unpredictable money pits. From surprise nappies to that toy that somehow explodes at 3am, unexpected expenses pop up all the time. An emergency fund is your little financial superhero — it helps you deal with the curveballs without turning your long term plans into a nightmare.
If you can, open a separate online savings account and treat it like a secret stash. Move small amounts from your main account each month, and if you have a bit left over at the end of the month, funnel that into the fund and pretend it does not exist. Think of it as hiding money from yourself so you only find it when you actually need it. Bonus: you get smug satisfaction when it saves the day.
Take Advantage of Tax Breaks
In the UK, there are several government benefits available for new and expecting parents. These include:
Statutory Maternity Pay (SMP)
This is paid by employers to new mothers who have been working for at least 26 weeks before the 15th week before their due date. SMP is paid for up to 39 weeks, and the first six weeks are paid at 90% of the employee’s average weekly earnings (before tax).
Maternity Allowance (MA)
This is a benefit paid to women who don't qualify for SMP, such as self-employed women or those who have not been working for their employer long enough. The amount of MA you can receive is based on your average weekly earnings. You can work for up to 10 KIT (keep in touch) days during this time without losing your maternity allowance pay.
Statutory Paternity Pay (SPP)
This is paid to new fathers or partners who have been working for at least 26 weeks before the 15th week before the due date. SPP is paid for up to two weeks and is paid at the lower option of £194.32 per week or 90% of the employee’s average weekly earnings.
Shared Parental Leave (SPL)
This allows parents to share up to 50 weeks of leave and up to 37 weeks of pay between them. SPL must be taken in blocks of at least one week and can be taken at the same time as the other parent or separately.
Child Benefit
This is a tax-free payment made to eligible parents of children under the age of 16, or under 20 if they are still in education or training. If one parent earns over £60,000 then the amount reduces so you will have to pay some of it back.
If one parent earns over £80,000 you are not entitled to child benefit BUT you should still apply, and tick the box to NOT receive payments. Not only will this ensure that your child receives a National Insurance number, the parent applying will also get a credit towards their own National Insurance each year if they aren’t working.
Tax-Free Childcare
This is a government scheme that helps working parents pay for childcare. For every £8 a parent pays into the scheme, the government will pay in an extra £2, up to a maximum of £2,000 per child per year.
There are also additional benefits available for low-income families, such as Universal Credit and Working Tax Credit. You can usually use an online calculator on the Gov website to check eligibility.
Take Out Life Insurance
Right at the top of your financial checklist for new parents is getting life insurance sorted. Seriously, pop it on the to-do list now rather than later, especially since babies do have a habit of arriving early and changing plans faster than you can brew a cuppa.
Life insurance is basically the safety net that stops your family doing backflips if the worst happens. It helps cover funeral costs, any debts you leave behind and gives your loved ones a bit of breathing space financially while they adjust.
It matters even more if you are the main earner, because it makes sure the household bills and the little one’s nappies are still covered even if you are not there to bring home the bacon. Think of it as sensible planning with a side of peace of mind.
Create or Update Your Will
Right, grown-up bit first. Sort out a will that names a guardian for your child in case anything happens to both parents. I know it sounds grim, but consider it a kindness to your future self and to whoever would otherwise inherit a mysterious pile of nappies. Update it as your family grows or life throws a curveball, because people, circumstances and tastes in baby names do change.
Add Your Baby to Health Insurance
If you already have health insurance, adding your new baby to the policy is one of those boring but brilliant moves. It means they can see a doctor without you having to remortgage the house after a bout of toddler drama.
Do it as soon as you can, because insurers often have strict deadlines for adding dependants. Leave it too long and you might find yourself making a frantic call while trying to calm a screaming tiny human and googling "how long after birth can I add baby to insurance". Not a great use of your time.
Read the small print, compare plans and pick the one that suits your family. Think about things like GP access, maternity checks, and what happens if your little one needs extra care. A bit of homework now could save you a lot of faff later.
Start Saving for Your Child's Education
It might feel ages away, but honestly it's never too early to start squirrelling money away for your child's education. With university fees creeping up and the gap between richer and poorer households getting wider, relying on hope and a lucky break is not the best strategy unless you enjoy stress and late night spreadsheets.
Getting started sooner rather than later gives you a much better chance of having enough when the time comes, whether that is for nursery, private school if that's your thing, or university. Think of it as planting a money tree, not betting on a sudden inheritance.
In the nearer term, saving for nursery fees is a very sensible move. Even with Government help, nurseries often expect top-ups and extras, and those little bits add up faster than you can say baby wipes.
Speaking from experience, nursery fees once outstripped my take-home pay when I was a teacher, and it nearly caught me out. It was one of the main reasons I decided not to go back to my Reception Teacher job instead of some noble career pivot.
When I added up nursery, wrap-around care and petrol to get to work, the maths made it pretty clear returning to work made no financial sense. That is a big part of why I left my job as a Reception Teacher. Do yourself a favour and run the numbers before you commit, so you do not get blindsided—nursery fees are through the roof.
Some full-time nurseries can cost more than what one parent might earn working full time. It sounds bleak, but try not to panic. Our tips for practical financial moves every parent should consider are here to help you feel a bit more in control and a bit less like you are juggling bills on a unicycle.
