Welcoming a new member of the family into this world is a truly life-changing event, but it comes with extra financial responsibilities that can turn into worries if you ignore them.
So before those sleepless nights roll round, it’s a good idea to get your finances in order and make a plan.
From planning for maternity and paternity pay, to making sure you have safeguards in place should the worst happen, and ensuring you don’t overpay on newborn essentials – here are our top tips for preparing your finances for a baby.
Baby budgets: Make sure your finances are on track before welcoming a new member of the family
Before they arrive
1) Plan your maternity, paternity or shared parental leave
You can take maternity leave for a full year, but remember you will need to give employers at least 15 weeks notice before you intend to stop working.
Paternity leave entitles fathers to one or two weeks paid time off, on top of your annual leave. This must start after the baby is born and you have to take it all in one go within 56 days of the birth.
You might also want to consider Shared Parental Leave which allows you to share up to 50 weeks of parental leave and 37 weeks of pay between a couple.
If you choose to take it, you will need to give your employer at least 8 weeks written notice of your leave dates.
2) Find out what your maternity, paternity or shared parental leave pay will be
As long as you have been working for your employer for more than 26 weeks and you earn more than £112 per week, you will be eligible for statutory maternity pay for the first 39 weeks of your maternity leave.
Again you will need to give notice, at least 28 days before you want your maternity pay to kick in.
For the first six months you get 90 per cent of your average weekly earnings before tax. After that, you will either continue to get either 90 per cent of your weekly earnings before tax or £139.58 a week, whichever is smaller.
Statutory Paternity Pay and Shared Parental leave both entitle you to either £139.58 a week or 90 per cent of your average weekly earnings (again whichever is lower).
To be eligible for Shared Parental Leave both partners must be eligible for statutory maternity or paternity pay. It pays out for the first 37 of the 50 weeks of a couple’s leave.
Remember some employers offer more generous terms on pay and leave on top your statutory rights, so make sure to check your contract.
If you don’t qualify for statutory maternity pay, because you are self-employed, haven’t worked for your current employer for long enough or you don’t earn enough you will receive Maternity Allowance instead.
This will pay the smaller of either £139.58 per week and 90 per cent of your average weekly earnings for up to 39 weeks or £27 per week for up to 14 weeks.
3) Do you qualify for any extra help ?
It could be worth checking whether there is any extra help from the Government available during your pregnancy.
You could get a one-off £500 Sure Start Maternity Grant from the Government if you are having your first baby, or are having more than one and you already receive certain benefits.
If you are pregnant or have children under four years old and you are on benefits or you are under 18, you could qualify for Healthy Start vouchers to help with the costs of food.
Don’t forget, you are entitled to free prescriptions and NHS dental care while you are pregnant and for the first year of your baby’s life.
To apply you can fill out a Maternity Exemption form (FW8) which you can get from your doctor.
Pregnancy discounts: Make the most of discounts and freebies from Mum-to-be clubs
4) Make the most of loyalty schemes and pregnancy discounts
There are scores of free clubs parents-to-be can sign up for to receive regular updates on sales, freebies and discounts. We have listed the best below.
Emma’s diary – sign up to Emma’s diary and you get £100 Argos money-off vouchers, plus you will get regular emails with special offers and discounts.
Mothercare club – exclusive discounts including 20 per cent off toys on your child’s birthday.
Boots parenting club – Advantage card members can sign up to get a boosted rate of 10 reward points for every £1 spent on baby products until your baby hits the age of three, on top of free gifts and tailored discounts.
Early Learning Club – 20 per cent off your child’s birthday present.
You can pick up a free bounty mum-to-be pack containing free samples from Tesco, Boots or Asda.
It is worth bookmarking the baby, child and parenting pages of the major supermarkets on your browser to keep an eye for any promotions they run.
Both Tesco and Asda have their own baby clubs which offer competitions, discounts and money-off deals. Sainsbury’s has a little ones section where you can often find relevant discounts
Many well-known brands including Babies R Us, Johnsons, Cow & Gate, SMA and Mamas &Papas offer their own parenting clubs.
While signing up to all of the regular newsletters and offer emails may clog up your inbox, it can help you make the most of promotions, sales and money-off vouchers.
5) Start a savings habit
Having an emergency fund is even more important when you have a baby, particularly as your income will drop and you may be relying on a single income.
An easy way to find a little extra to put away is to see if you can cut down your bills and divert the extra cash into a savings pot.
If you have credit card or overdraft debt make sure a hefty interest rate isn’t making it harder to repay.
Switching your debt to to a 0 per cent balance transfer card or moving it to a current account with a generous interest-free overdraft buffer or low fees could save you hundreds of pounds in interest.
If you have never switched energy suppliers before you could stand to save as much as £300 or £400 by ditching it for a better deal.
You can use your postcode in This is Money’s energy finder tool (right) to see how much you could stand to save.
Don’t forget your other household bills. The best broadband deals are typically offered to switchers meaning those who let their contracts roll over often pay a lot more than they need to.
A quick comparison search could help you find a better deal to negotiate with your existing provider or give you the motivation to leave altogether.
After they have been born
6) Make sure you have life insurance
After having your first child it is more important than ever to consider life insurance, to ensure that should the worst happen your new addition is provided for.
There are a handful of different types to decide between, from the most basic term insurance which pays out a lump sum if you die before a set date to Family Income Benefit which will pay a regular income until a specified date.
You will want to think carefully about whether you want to choose a lump sum or a regular income to help those you would leave behind.
The price depends on your circumstances and the level of cover you require but premiums start from around £10 per month.
7) Consider other insurance policies
You may also want to consider income protection insurance to help with the extra financial pressures of having a child should you lose your job or are unable to work because of illness.
Don’t forget to update your home insurance. A new baby typically means spending a fortune on everything from cribs to toys. You may need add any valuable items or extend your contents value.
It could be worth checking with your employer as some will offer group schemes as part of employee benefits schemes.
8) Find out if you could get help with childcare costs
After your baby is born you will be eligible for Child Benefit unless either you or your partner earns more than £60,000.
This is currently worth up to £20.70 per week for your first child and £13.70 per week for each additional child up until the age of 16, or 20 if they are in education or training (from April this will be capped at the first two children unless you have had multiples).
If one parent earns over £50,000 you can receive a partial pay-out.
If one of you does earn more than £60,000, then you should register for child benefit with a claim form and then opt not to take it. This is because it helps make sure that you build up national insurance credits for your future state pension, if you are not working and looking after children.
You may also be able to claim Tax Credits. There are two types, working tax credits and child tax credits. You may be eligible for one or both.
It is also worth checking if you could qualify for childcare tax credits (the childcare element of working tax credits). Find out if you qualify here.
Families in some areas will instead be able to apply for Universal Credit which replaces some benefits and tax credits.
Another option is childcare vouchers through your employer. These are being phased out from April 2018 to be replaced with Tax-Free Childcare.
But they currently offer working parents a tax efficient way to cover expensive childcare, paying for vouchers out of your wage before tax and national insurance.
Under the new system the Government will contribute 20p for every 80p parents pay for your childcare up to a maximum £2,000 per child (or £4,000 for disabled children) each year.
To be eligible you must be in work and earn over £100-a-week, with single incomes below £100,000.
9) Make sure your will is up to date
The last thing you will want to think about when you have a child is the prospect of not being there to see them grow up. Updating or writing your will however gives you peace of mind that your wishes will be carried out.
One of the most important things you will need to consider is who will be your children’s guardian until they reach 18. Your will also enables you to lay out what financial preparations you have made for them while they grow up if the worst happens.
You can find out more about how to draw up a will and what your options are here.
Alternatively, find out more about lasting power of attorney and will writing with a guide from our carefully chosen partner service, Key Retirement Solutions.
10) Consider saving for your child’s future
You make want to consider starting a savings account for your child to help give them a leg-up later on in life.
It could come in handy when it comes to university or making their first step on to the property ladder.
You could consider a Junior Isa. You can currently put away up to £4,080 divided between stocks and shares and cash, tax free. But the money can only be accessed when your child reaches 18.
NS&I Children’s Bonds allow you to save between £25 and £3,000 tax-free for five years until your little one reaches 16. You will benefit from guaranteed interest (currently set at 2.5 per cent) over the term, but if you withdraw the cash early you face a 90-day interest penalty.
You can take out a premium bond held in your child’s name if they are under 16. While you won’t receive interest, prize draws allow you to win tax-free sums of between £25 and £1million. Odds are currently around 30,000:1 however.
Some banks offer specific children’s easy-access accounts paying around 2-3 per cent, and regular savings accounts paying up to 4 per cent.
Remember, while regular savings accounts are great for helping you build up a savings pot, you will only receive interest on the total balance you have deposited for the final month of the 12-month term.
You can find out the top rates using This is Money’s independent best-buy savings tables here.