How do I financially prepare for a baby?
Apr 2, 2023
Expecting a baby is an exciting time, but it can be scary too. Especially when it comes to the financial side of things. Not only are babies notoriously expensive, but your earnings are also likely to go down for a while when the baby first arrives.
Don’t panic! There are loads of things you can do to financially prepare for a baby, whether you’re pregnant or thinking about trying. Here are some simple steps to help you take the weight off your shoulders (if not your belly!).
How do I start preparing for a baby financially?
It’s never too early to start preparing for a baby financially. In fact, the earlier you start planning the better!
That said, babies have their own timeline – so, these steps should help you to start preparing for your baby whether you’re just thinking about trying or you’re days from baby’s arrival!
1. Take stock of your finances
First things first, sit down and do a deep dive into your current financial situation. If you’re in a relationship, now’s the time to have a frank and open conversation with your partner about your joint finances.
Review how much you each earn
Note down your existing ongoing expenses
Avoid keeping any financial secrets
Put time aside to regularly discuss money matters
2. Reduce your expenses
Next, ask yourself how many of your current expenses are essential – where can you cut back?
A necessary expense might be your mortgage or rent. An unnecessary expense might be that newspaper subscription you forgot to cancel.
The more you can reduce your expenses now, the more money you’ll be able to set aside ready for when baby comes.
3. Start saving
Open a savings account where you can put money aside in preparation for baby’s arrival. You can use these savings to buy baby essentials in advance (check out our guide to when you should start buying baby stuff during pregnancy if you’re unsure). And you can use it to get you through any period of lower income too.
It’s probably going to be best to open an account that will allow you to easily access your money – rather than one that locks it away for a period of time. However, if you think you’ll be tempted to dip into your savings for non-essential (and non-baby-related!) items, you could open a savings account with a different bank from the one you usually bank with. That way, it might be more difficult to transfer money over to your current account on a whim!
4. Claim what you’re owed (when you can)
Depending on where you live and your personal circumstances, you might be able to get financial help for your new baby.
In the UK, new parents can usually get maternity pay, maternity allowance or shared parental leave to help tide them over during any time off work. However, depending on your place of work (and your personal situation) this probably won’t be enough to live off alone – so, you’ll want to have something else to dip into as well.
In the UK, parents can also apply for Child Benefit to receive an allowance from the government for each child (exactly how much you receive will depend on your earnings). You’ll need to wait until your baby’s arrival to apply, but it’s worth doing it soon after as the government can only back-date applications by three months.
5. Put together a baby budget
Once you know how much money you’ll have coming in and going out, it’s time to look at how much you have left over to spend on baby items.
Put together a list of things you’ll need to buy ready for baby’s arrival – our list of newborn essentials will help.
Then, consider how you’re going to be able to buy them all with the money you have in the bank. For example, you might need to buy second-hand or accept hand-me-downs if it allows you to stay within budget.
Alternatively, why not set up a baby registry on Moonsift? That way, you can share all the baby items you need with friends and family, so they can tick them off your list when it’s baby shower time (or when baby makes their grand entrance!).
How much savings should I have for a baby in the UK?
There’s no rule for exactly how much you should save for a baby. After all, everyone’s circumstances are different and some lifestyles cost more to sustain than others!
When you’re working out how much you should save, make sure to consider:
Your household income. Many households operate on just one salary for a while after a baby is born.
Childcare costs. If you’re planning on returning to work soon after baby comes along, you’ll need to factor in the cost of childcare.
Baby essentials. Just adding a packet of nappies and a couple of tubs of formula to your average food shop can quickly eat into your budget.
How much does a baby cost in the first year in the UK?
The Times recently reported that the total cost of raising a child between the ages of 0 and 3 years old is £44,097, including housing and childcare costs. That comes to an average of £11,024 per year. On top of that, the average spend on baby stuff during pregnancy is around £3,530.
That said, the actual cost of raising your baby in the first year will depend on loads of things like how they’re fed, how much stuff you want to buy them, what you plan to do for childcare and whether you’re planning on buying essentials new or secondhand.
How much do babies cost a month?
If you break down the figures above, you can expect to spend almost £920 per month on your baby in the UK.
To bring these costs down, consider creating a baby registry. That way, rather than forking out on all the baby essentials yourself, you can get friends and family to tick items off your list when they buy you gifts at your baby shower (or when baby makes their grand entrance!).
Creating a baby registry on Moonsift is super easy. Plus, you’ll be able to add items from any online store. So, your loved ones can help you with anything from a car seat to that cute little sleepsuit you’ve been fawning over!
How do I prepare for twins financially?
If you’re expecting twins, you’ll need to save up a bit more as you’ll be forking out on baby essentials for two babies instead of just one. That means double the nappies, double the wet wipes and, if you’re formula feeding, double the formula too!
That said, it’s worth bearing in mind that you won’t need two of everything. So, it’s important to be a bit savvy when you put together your shopping list!
For instance, while you’ll definitely need two car seats, you’ll easily be able to get away with one changing mat and one baby gym. After all, your babies will be used to sharing!
Consider also that while you’ll need to save extra for newborn essentials, your income shouldn’t really drop any more than it would if you were having just one baby.
What can I do for my baby financially?
Providing for your baby is first and foremost about keeping them warm, fed and clean. However, there are some things you can do for them financially too. And a lot of it is relatively easy and inexpensive.
Get your life insured. For a relatively small monthly fee, you can make sure your baby is financially protected should the worst happen to you. Getting an insurance policy that will pay out an annual tax-free income (rather than a lump sum) will ensure that your baby can be financially stable for years.
Make a will. Another slightly morbid one, making a will now instead of waiting until you’re old will allow you to protect the most valuable thing you own – your baby! You could get a professional will writer to create a will for you and your partner for around £150, although you can also get DIY ones for a lot less.
Open an account for them. If you’re like many parents, scraping up enough money to keep your baby happy and healthy is as much as you can stretch to. And that’s okay! But if you do have money left over, sticking it in an account for your child to access when they’re 18 – like a Junior ISA – can be a great way of setting them up for financial success in the future.
Get prepared for your baby with Moonsift
With Moonsift, you can collate all the baby items you need in one easy-to-manage place, ready to buy when you have the finances available. In fact, when you save items to Moonsift, we’ll even notify you if the price drops!
Better still, you can send your collections to family and friends as a baby registry. Unlike most baby registries, Moonsift allows you to add items from any store in the world, so your loved ones can help you save money on those all-important baby essentials – wherever they may be! Just sign up to start preparing.
