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How to manage your finances if you’re becoming parents

Are you soon-to-be welcoming a child into your family? Firstly, congratulations! You’re about to embark on a whirlwind journey of joy, tears andeverything in-between. You might not feel mentally or physically ready just yet, and that’s totally normal. But as all parents will tell you, you’ll need to at least try and prepare financially.

Research from The Money Charity suggests it costs an average of £24.44 per day to raise a child to the age of 18. It’s a cost that will no doubt be worth it, but it still takes some serious planning and adjustment. So where do you start? 

Read my tips below on managing your finances and laying solid foundations in time for welcoming your new arrival.

Aim to clear outstanding debts

It’s normal to take on debt as you go through life. In fact, our credit score system positively encourages it. But paying off as much outstanding debt as you can, or at least planning for reducing your monthly payments, will allow you to enjoy family life with less stress looming in the background.

Start saving (if you aren’t already)

It’s usually best to start saving early, no matter what’s going on in your life. But with a new baby and a reduced household income on the horizon, it makes sense to take things up a level while you can. 

Where you put your money is crucial here. If you keep more than you need in a current account, think about depositing some into a regular savings account with a healthy interest rate instead.  

Create a baby budget

There’s no way of avoiding it; with a new child on the way, you’re going to have a bunch of new expenses to account for. That includes initial costs for things like cots, prams and other equipment, as well as ongoing spending for food, clothes, and lots of laundry detergent!

Make budgeting a priority, if it isn’t already, and try to be as realistic as possible.

Review your outgoings

Creating your baby budget will involve listing all your essential and not-so-essential outgoings. As you’ll likely need to find ways to save cash for baby expenses, this process should highlight where you can cut back.

Common savings opportunities are things like unused subscriptions and unnecessary meals and drinks out. The Bank of England recently warned inflation will keep rising to around 10% later this year, so every little helps. 

Factor in your employment situation 

Do you have a plan for how you’ll balance work when the baby arrives? You might intend to go back early or spend as long as possible with your new pride and joy. Either way, understanding what maternity or paternity packages are available to you will help guide your decision.

If you do plan on returning to work early, you’ll need to research childcare costs or think of viable alternatives.  

Have you got these points covered? Taking care of the financial side of things will allow you to enjoy more care-free time with your new baby.