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Financially preparing for a baby

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With the average cost of raising a child to the age of 21 reckoned to be over £200,000, financially preparing for a baby as soon as possible is a good idea, so you’ve got a nest egg to cover the costs of, well, nesting.  But for those of us less practical or who weren’t planning a family, it’s still worth salting some cash away once you see that blue cross on the stick, otherwise you could soon be seeing red figures on your bank statement.

How much to save?financially preparing for a baby

But how much do you really need to save up before the baby’s born? Well, the simple answer is, as much as you can, and it’s certainly a good idea to start thinking about how much the first year will cost you, from maternity pay to baby gear.

Start by checking your workplace’s maternity and paternity policies. This should give you an idea of how much your pay will be, what paid leave you’re entitled to, and whether you can afford to take any unpaid leave.

Getting prepared

Think then about what you’ll need to spend getting your home ready for the new arrival. Some couples move to a bigger property but even if you’re staying put, you’ll still need to decorate and furnish a nursery. Then there’s all the other baby kit – from pushchair and car seat, to baby bath and bouncy chair. And monitors, a highchair, stair-gates, bottles and sterilisers. And don’t forget nappies. (Never forget nappies; buy them on every shopping trip, starting now!)

You should also take into account the cost of childcare when you return to work. Be realistic about how much cash you’ll have to find out of your salary, whether it’s going to be full- or part-time.

It’s not all paying out!

If all this seems to be adding up to a horrific total, don’t despair. Remember there are some pluses here too.

You’ll receive Child Benefit for each child, and you may also be eligible for Child Tax Credit or Working Tax Credit, so make sure you apply for and receive what you’re entitled to. Many employers offer tax-free childcare vouchers as part-payment of your salary, which can help (but may need to be factored in to your tax credit calculations). And if you’re keen to eke out your maternity leave a bit longer, check out your mortgage terms – you might be able to take a short payment ‘holiday’ to bridge the gap and spend some extra precious months at home with your little one.

So what are the golden rules of preparing your finances for this life-changing event?

  1. Put yourself in the best possible position before the birth – start saving NOW.financially preparing for a baby
  2. Do your homework so you know how your finances are likely to shape up on maternity/paternity leave, and when you go back to work.
  3. Don’t be precious about buying new baby stuff. What about that crib that’s passed down through the family, your best friend’s buggy that they don’t need, or hand-me-downs from your neighbour? NCT Nearly New Sales offer great bargains, and of course there’s always eBay. But not for car-seats, please (or nappies, urgh!).
  4. Be prepared for things not always going according to plan. Your request for flexible working might not be accepted; your baby might not get a place at the most affordable nursery, or (whisper it) it could be twins. So leave a bit of wriggle-room in your calculations.
  5. And, finally, take advantage of everything that’s free for babes-in-arms and under-2s – from soft play to flights – because once you’re paying full price your wallet’s likely to always feel a bit on the skinny side!



About Alison McKay

About Alison McKay

Alison McKay is a charity PR professional with over 15 years' experience in full-time, part-time and jobshare roles. Since being made redundant while on maternity leave, she has divided her time between working for a local museum, freelance and volunteer writing, and being chief wrangler to a two-year-old mud-magnet and an almost-seven-year-old wannabe dog-care worker with a penchant for hair accessories. Alison's hobbies include yoga, reading cookery books and putting away just enough clean laundry to keep the pile below 3ft tall.

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