How to budget and prepare for a new baby

When you find out you’re expecting a baby there can seem an overwhelming number of things to do. Soon-to-be mothers and fathers need to organise antenatal appointments, sort out their employment situation, work out what pay they are entitled to, plan their household finances to accommodate the new arrival, and ensure they are taking care of their own health too!

The costs of a having a baby can quickly add up, so to minimise the stress this may cause, effective financial planning is essential.

Maternity leave

Understanding what leave and pay you can receive is fundamental to being able to prepare for the new baby. Knowing how long you will have off work, and what income you will get in this time, will help you to plan your budget in advance which can help avoid any financial issues later on.

All mothers-to-be are entitled to up to 39 weeks of paid maternity leave, which employers must provide, but some firms may also have an extra company maternity policy. Liaising with your employer to confirm when you will take your leave and return to work, and to clarify what the company offers you, is crucial to organising the rest of your finances.

Mothers may choose to use Shared Parental Leave and Pay instead of maternity leave. This allows them to share their leave and pay with their partners, with some flexibility in whether they take it together or separately.

Depending on the situation of the parents, they may also be entitled to other benefits and grants to help with the costs of the baby. Parents should set aside some time to find out what sums they are entitled to receive, as this will help them to work out a realistic and accurate budget for before and after the baby’s arrival.

Saving money

It isn’t just in the lead-up to the birth that you need to plan your finances. The costs will continue to come once the baby arrives, ranging from clothes, to specialist furniture and equipment, to food, to hygiene, to childcare. Calculating your child’s expenses can be a time-consuming task, but it’s worth it in the long-term so you don’t feel so worried about money!

After calculating the costs, you may need to identify where can save some cash. Sometimes it’s the little things that can add up to big savings and make your finances a little less stretched.

Buying certain items second-hand from online platforms, charity shops, or car boots, or getting things from friends and family, will help you to keep costs down. It isn’t necessary to buy everything brand new, especially clothes and other items that the child will quickly grow out of!

Babies and their related paraphernalia also take up a lot of space, so this may be a good opportunity for you to clear out some stuff. Selling some of your old items, and anything your baby no longer needs, can free up some room as well as providing you with some extra cash.

Coping with the extra cost

Even with budgeting, parents may still find it a struggle to afford the cost of a baby, especially if they are on leave with a reduced income. Mortgage payments can be a drain on your finances, so taking a ‘mortgage payment holiday’ can relieve the pressure on your finances for a bit. Whether you can take a break from mortgage payments will depend on your lender, and should only be a temporary measure as you will continue to accrue interest in this period.

Some people may also remortgage their property to free up some capital and to switch to a provider which offers cheaper rates. Choosing to remortgage is a decision that requires plenty of advance planning to find a good deal, so getting a plan in place for your finances as early as possible will help considerably in the long term.

Preparation is key

Whatever your situation, preparing a financial budget in advance will help ease the pressure when the baby arrives. Making sure you have enough money to cover payments and additional costs will allow you to enjoy life with your baby, without the added worry of how you will manage your finances.