How to Financially Prepare for a Baby

When you have a baby, your life changes forever. It’s a wonderful and exciting time, and it makes sense to do everything possible to keep it that way. Pregnancy, birth and baby care give you enough to be concerned about without adding financial worries to the mix.

Finding out exactly where you stand, what help you can expect and what allowances you can claim all help to keep the financial wheels turning smoothly.

Develop a Savings Habit

Long before your baby is born (or even before you’re pregnant or start trying for a baby), building up a savings pot will give you a cushion against emergencies.

Ways to cut down on spending so you can save a little more include:

  • Switching energy suppliers or tariff.
  • Avoiding paying high interest on loans or credit card debt by switching to a zero percent alternative.
  • Cutting down on entertainment.
  • Finding cheaper grocery alternatives.

If you complete a self-assessment tax return, either because you’re in business or have a secondary income as well as that from regular employment, investigate ways to trim your tax bill. An accountant can help you make sure you’re claiming all your allowances, and show you other ways to make your finances work more efficiently.

No sum is too small to save as it all mounts up, and it’s never too late to start. Open a separate bank or savings account so your savings are tucked out of easy reach. As well as building up a nest egg as an emergency or luxury fund, you could consider your savings as investment in your child’s future, either for university or as a deposit on a house. If you’re interested in that option, scout around for a Junior ISA or NS&I Children’s Bonds, or easy access bank accounts specifically for children.

Check Your Maternity Leave Entitlements

If you’re working, find out what your maternity and paternity entitlement is for time away from your job and your payments. There are strict rules that govern who qualifies for what, and in order to get full maternity leave and pay you must have been working for over 26 weeks and earning over £112 per week.

You may be able to share parental leave with your partner, so this is worth investigating too.

Self employed people who obviously don’t qualify for statutory maternity pay (or those who haven’t been working for an employer for the required length of time) may still get help via the maternity allowance.

After the Birth

Unless you (or your partner) earn more than £60,000, you’ll qualify for Child Benefit which stands at £20.70 for the first child and £13.70 for additional children per week. Other things to check your entitlement to include child tax credits (or Universal Credit depending on where you live), or childcare vouchers from your employer.

Benefits and credits are always being changed and updated by the government, with new schemes and payment methods and amounts coming into force. It’s always worth checking up on your entitlement, either by asking your employer or searching online. The HMRC website has accessible information, as well as how to claim.

On a personal level, you may wish to review your insurance and make changes to your will. While it’s not something any of us wants to think about, working out how much your assets are worth and making your wishes known regarding inheritance for your children should the worse happen can give you peace of mind once you’ve tackled the issue.

Once you get your finances in order, it’s much easier to budget and relax so you can enjoy your baby. Leaving things to chance, or simply hoping for the best might mean you miss out on help that could make a world of difference.

 

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