UPDATE 17 March: Further benefit changes have been announced since this article...
Planning a baby on a budget
Hormonal ups and downs bring feelings of excitement, anxiety, nervousness, elation and fear; but along with managing all these emotions your finances play a massive part in preparation for a baby.
The drop in income along with the costs of a new-born can cause even the most stable household budgets to buckle. However, with a little planning you can minimise the worry of having a baby on a budget.
1. Plan your finances
We don’t live in an ideal world and for some people pregnancies come as a surprise (hopefully a pleasant one!). Whatever your situation, start planning your finances as early as possible.
Sit down and work out a budget to see if there are any changes you can make:
- Reduce your spending on non-essentials
- Increase your income
- Switch utility providers
Read our guide to saving money and increasing income to get some tips.
2. Look at your debts
Have you got any debts that are manageable now, but that may become unmanageable when your income decreases?
Don’t leave it until after the baby arrives – now is always best. Get some free and impartial debt advice now so you can start to think about how you’ll manage. Your creditors may not think you need help, but it’s worthwhile starting to prepare your finances now.
3. Do you have a maternity package?
Find out what your company pays for maternity leave. This information should be available in your contract but if you’re unsure, speak to a HR advisor in confidence.
Work out how much you’ll receive and how long for, to help you assess how long you can take off work. If you need any advice about being treated fairly by your employer during your pregnancy speak to Acas.
4. Check your entitlements
There are a variety of benefits available to new parents:
- Paid time off for antenatal care
You’re entitled to paid time off for any medical appointments relating to your pregnancy. This also covers parenting classes if these have been recommended to you by your doctor or midwife.
- Statutory Maternity Leave
You’re entitled up to 52 weeks Statutory Maternity Leave. You don’t have to take the full amount but you must take 2 weeks’ leave after your baby arrives. The first 26 weeks are ‘ordinary maternity leave’ and the following 26 weeks are classified as ‘additional maternity leave’.
- Statutory Maternity Pay
You’re entitled to Statutory maternity pay for up to 39 weeks. For the first 6 weeks you receive 90% of your weekly earnings before tax. For the following 33 weeks you are then entitled to £139.58 or 90% of your weekly earnings (whichever is lower). This is paid straight into your bank account and tax and national insurance will be deducted.
You can use the government’s maternity calculator to work out your leave and pay entitlements.
- Paternity leave
Expectant fathers are entitled to up to 2 weeks leave from work; check if you are eligible. To apply for paternity leave you must inform your employer at least 15 weeks before the birth and inform them of:
- The due date
- When you want the leave to start
- How long you want to take as leave – either 1 or 2 weeks
- Paternity pay
The statutory weekly rate of Paternity Pay is £139.58, or 90% of your average weekly earnings (again, whichever is lower). This will be paid into your bank account and normal deductions for NI and tax will be made
- Child benefit
Once you have a child you’ll be entitled to claim child benefit – £20.70 per week for the first or only child, and then £13.70 for each additional child.
- Other benefits
- Healthcare costs
Don’t forget that dental care and prescriptions are free up until your baby is one year old.
5. Monitor your spending
With friends and family asking how your preparations are going and your ‘nesting’ hormones kicking in it may be difficult to curb your spending.
It’s easy to think that you need everything ready in matching colour schemes months before the baby is due but try to keep your spending in check.
- Plan to buy your bigger items across the pregnancy
- Don’t get caught up thinking that your baby needs everything straight away
- Consider your options seriously before parting with your cash
- Look at buying some items second-hand through online auction sites and NCT ‘nearly new’ sales
Remember, you can always ask someone to get something for you if it’s needed urgently after the baby is born.
6. Knowledge is power
There are lots of free apps and online forums available to help you prepare for becoming a parent, they can help you feel supported and give you money saving tips during pregnancy and beyond:
- BabyCentrehave a free app which gives you a daily update as well as free guides and a busy parenting forum
- Netmums have an in-depth website with a forum, parenting advice and reviews of baby products
It’s also a great idea to find local parenting groups and meet ups so that you have extra emotional support.
7. Think about returning to work
It’s probably the last thing on your mind right now, but when it does come to returning to work it’s important to consider all your options. Find the answers to questions like:
- Speak to your employer – do they have a ‘Family Friendly’ policy?
- How much will childcare cost, and are you eligible for childcare vouchers?
- Do you have family or friends that are willing and able to help out?
- Is there an option to return part time or, from a financial point of view, is it worth returning at all?
There’s a lot to think about so take the time to look at all the possibilities.
8. Enjoy it!
Having a baby is a happy time and it’s vital that you look after the health and wellbeing of you and your baby before anything else.
Try to remember that there’s very little that a baby actually needs – a healthy and happy upbringing far outweighs having the latest gadgets or designer clothes but with a mother deep in debt.