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With the average cost of raising a child to the age of 18 now estimated at around £160,000 for couples and £190,000 for single parents, according to the Child Poverty Action Group, there is a lot to think about as you prepare to have a child.
Not only will you need to factor in the long-term cost of your new arrival, from kit and clothes to food and education, you’ll also need to consider the financial impact of maternity or adoption leave and whether you can afford it.
If you’re an employee, you can take up to 52 weeks’ maternity leave, but you’ll only be entitled to Statutory Maternity Pay (SMP) for 39 weeks. What is more, SMP may be a lot less than your usual income, so having a baby can mean spending more while earning less.
It’s a good time to assess your finances as maternity or adoption leave approaches. There is a lot to be said for thinking ahead, so it is a good idea to consider how much time you would like to take off and can plan accordingly.
Here are some money-saving tips you can use to ensure you feel on top of your finances throughout pregnancy and beyond or if you are planning to adopt a child.
Build up your savings
Building up your savings when planning to have a baby can give you funds to fall back on when your income drops during maternity leave.
Saving what you can is always a good idea, but when having a child, it could also help you create a safety net that allows you to avoid expensive borrowing when unexpected costs arise.
Every little counts – getting into the habit of putting even a little aside each month is good practice. It will soon build up and you might be surprised at how much you can now spend on the essential bibs, bottles and babygrows.
» MORE: How to start an emergency fund
Make a budget
With a new child come new responsibilities and new expenses. Learning how to budget allows you to plan for these and set aside enough money to cover them when they arise.
When it comes to money, most people know what they earn but many are in the dark about exactly how much they spend each month. Listing your incomings and outgoings is key to financial planning and getting a handle on your finances.
When you look at your budget, ask yourself: Are there any shortfalls? Can you really afford that top-of-the-range buggy? Or would it be better to source one secondhand, leaving you with more to spend on other things?
Getting the full picture of your personal finances is key to having a realistic idea of what you can afford to spend when it comes to your baby’s clothes, toys and equipment.
Look for deals on your bills
With your budget in front of you, you can now look at your regular household bills and see if you are paying too much. Comparing what you pay on your household bills is not likely to be top of your to-do list with a newborn in tow, but checking up on these might save you a lot of money in the long run. There are some that you won’t be able to haggle down, such as road tax and your TV licence, but when it comes to home and car insurance, energy bills, and broadband and mobile contract, there is much that can be done.
Switching suppliers or tariffs may help you save money, leaving you with more to spend on your little one. Often, if you are out of contract, you could save money by moving to a different supplier or haggling with your current supplier to match a new deal on the market.
For example, if your broadband contract has just finished, it’s worth shopping around to find the best deal for your needs, and then ask your provider to match it. There is no guarantee they will, but many will want to keep your custom – and if they don’t match it, you can switch.
If you are locked into a contract, you can still look around for better deals but you should consider any exit fees you would need to pay if you leave your current contract. Sometimes leaving your contract early and paying the fees can be worth it, but this depends on your individual circumstances.
When it comes to energy providers in particular, it is important to consider your options thoroughly. Recent rises in energy prices, plus a predicted rise in the energy price cap to be announced in February, mean that switching at the moment might not get you a better deal.
Additionally, if your provider has collapsed, you should not switch until you have been automatically moved to the replacement supplier Ofgem has appointed. If you don’t wait, you might struggle to get back any money you’re owed if you are in credit.
Shop secondhand
Make use of online marketplace platforms or hunt through charity shops and car boot sales to find bargain prices for baby essentials. Selling unwanted items online can also help you earn a bit of extra cash while on maternity leave.
There are marketplaces, such as Gumtree and Facebook Marketplace, where you can buy or sell clothes, toys and much more besides.
Alternatively, you can use your postcode to browse neighbourhood sites, such as Freecycle – where you can give and get items for free – and Nextdoor, where you may find what you want practically on your doorstep.
You may also be able to get free secondhand clothing and other essentials from friends and family who have recently had children. It is worth spreading the word about what you’re looking for and you never know, someone might be looking to get rid of the very thing you’re after.
Make the most of what you’re entitled to from work
If you are planning to return to your job after maternity leave, it is a good idea to keep in contact with your boss and colleagues while you are off.
This will allow you to keep up to date with what is happening, including any upcoming promotion opportunities – and you will also get paid for your time.
Using your ‘keeping in touch’ (KIT) days is an easy way to do this and can be used for training or meetings with colleagues, keeping you in the loop while you are on leave.
You can use up to 10 KIT days with no effect on your statutory maternity payments.
What is more, you will still build up your holiday allowance while on maternity or adoption leave. You may therefore choose to take this at the end of your leave to increase the length of your paid time off, so you can spend more time with your newborn while being paid for it.
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