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Life moments – having a baby

Thursday 17 February 2016

There’s a lot to think about when planning for your first baby, but getting your finances in order is one of the biggest considerations, says Kalpana Fitzpatrick, financial journalist and founder and editor of Mummy Money Matters. If it’s planned properly though, the costs are more than manageable.

Small child on a sofa with a long list

Start saving

So, how much does a child cost?

Bringing up a child from birth costs over £231k from birth to age 21, according to the latest LV= Cost of a Child Report.

If you are trying for a child, or plan to in the near future, set up a baby fund by stashing away as little as £10 a month. Increase it when you can.

Aim to save at least a minimum three-month’s salary before the baby’s born, as this will give you a head start on saving and an idea of how much you will need to budget each month.


Whether you’re thinking about a baby or expecting one, it’s vital that you budget. Sit down with your partner and take a look at all your income and outgoings.

You’ll be surprised at where you can make cuts, whether losing an unwanted TV package, unused gym membership, or making a simple switch of service providers.

Give yourself the challenge to live on one parent’s salary and see how you manage, especially if there’s a chance one of you may decide not to return to work or just go back part-time after having a baby.

If you’ve recently had a baby – congratulations! It’s not too late to work out how much your child will cost and start a family budgeting plan.

Maternity pay

Babies don’t come cheap, but there is financial help available.

At work, you’ll be entitled to 52 weeks off after having a baby, known as statutory maternity leave.

You will get paid for 39 weeks, known as statutory maternity pay (SMP), if you are an employee, earn on average over £112 a week and you have been with your employer for at least 26 weeks up to the “qualifying week”, which is the 15th week before your due date.

SMP amounts to 90% of your average weekly pay and it’s paid for six weeks. You then get £139.58 or 90% of your weekly earnings (whichever is less), for the next 33 weeks.

For SMP, you must provide your employer with a MATB1 form, which you get from your midwife after your 20-week scan (which is when it all starts to get very real).

After the first six weeks, you may see a significant drop in income, so it’s a good idea to plan well.

If you earn less than £112 a week, recently stopped working or you are self-employed, you can claim maternity allowance, which is £139.58 a week.

If you find you are not eligible for either SMP or maternity allowance, then you may still be able to claim £27 a week for 14 weeks.

You can claim for maternity allowance using the MA1 form.

Financial help

As well as maternity allowance, there are other benefits to being a mother that may be available to you.

  • The Sure Start maternity grant: a one-off £500 lump sum available from week 11 of your pregnancy is also available if you are on certain benefits and you are going to be a mother for the first time. You can claim for it using this form.
  • Maternity exemption certificate: It’s a great time to visit the dentist when you are pregnant, because it’s free!. On top of that, you will save £8.20 on all your prescriptions. Ask your GP or midwife for the FW8 form as soon as you find out you are expecting.
  • Child benefit: You can claim for child benefit as soon as your child is born, entitling you to £20.70 a week.
  • Child benefit rules have become rather complex, but essentially, if you or your partner earn more than £50,000 a year, then you will have to repay some of it, known as “high income child benefit charge”. You can claim for child benefit on the government's site.
  • Child tax credit: – if you’re on low income, you can get extra help with child tax credit -– an annual payment from the government to help you with the costs of raising a child. Use this tax credit calculator to see if you are eligible.
  • Antenatal care: – expecting mums can take paid time off for antenatal care. Talk to your employer if you need to apply.
  • Shared parental leave: – it’s not just about the mums!. If the father of the child wants to take time out with the baby, then you can apply for shared parental leave.

Get your life insured

Being fully responsible for a child can be truly daunting: all of a sudden you are responsible for a tiny person who is relying on you for his or her every need – this means it is important that, should anything unexpected happen, you are prepared.

If you or your partner may be unable to work due to illness or injury, unless you have significant savings or you think you could live on just sick pay, then consider income protection.

Preparing for the unexpected comes with the responsibility of having a family, so also take a look at how much money your dependents would need. Talk to your insurance provider to discuss what type of life insurance would suit your needs.

If you rely on both your wages and your partners to keep your family financially secure, it might be worth considering joint life insurance, for example.

Having a child is one of the most exciting moments for anyone, but becoming a parent means responsibility as well as reward. The help is out there, so with the proper preparation and research you can make sure that everything is in place for when you welcome a new life into the world.

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