So, you’re planning for a baby? Exciting! Or maybe you already have a little one on the way? Either way, you now want to start thinking about planning for a baby financially.
Yeah, um, that’s less exciting.
Yes, babies are bundles of joy.
But, if we’re being humdrum, raising a family also involves a big financial commitment.
You may well need to budget, manage your savings, and double-check you’re financially ready before your little one arrives on the scene.
So, here’s how to budget for a baby – and we’ve got some tips for keeping your finances neat and tidy in the first year, too.
In this article: 📝
- How to prepare for your baby financially
- How much does a baby cost per month on average?
- How much money should you have saved before having your baby?
- What should I do financially before having my baby?
- Tips for after your baby has arrived
How to prepare for your baby financially
Among all the swirling emotions of pregnancy – the excitement, the insecurity, the joy, the nerves – there may be a nagging question that rears its head: am I financially ready for a baby?
Only you can answer that one.
But to help as much as possible, we’ve listed some guideline tips on how to get those finances in order before your little one enters the world.
But first, some background:
How much does a baby cost per month on average?
The UK Child Poverty Action Group estimates that the average cost of raising a child to age 18 is £166,000 for a couple, and £220,000 for a single parent.
That works out to an average cost per month of around £770.
This includes all the regular expenses during babyhood and childhood, such as clothes, food, medical bills, school supplies, activity fees, holidays, and so on.
Some of that cost is front-loaded into baby’s first year, when you might end up buying a lot of stuff and maybe having more medical bills than usual.
According to one survey, the average cost of the first year of a baby is as much as £16,500.
But remember this is just one survey, and it’s an average.
How much money should you have saved before having your baby?
As we said, £16,500 is a number that popped up in a survey.
But really, there’s no official figure to save before having a baby.
Do whatever you can.
A good way to work out a rough number is to calculate your medical expenses and your baby budget for the first year.
But don’t forget the non-baby-related stuff, too. Retirement funds, mortgage payments, and ongoing living expenses.
What should I do financially before having my baby?
Here are some things that might be worth thinking about before having a baby:
1. Planning for maternity or paternity leave
If you’re hoping to take some time off work during this time (recommended!), it’s best to work out how this might impact your finances.
2. Understanding your health insurance
Even with health insurance, the costs of having your baby can add up.
Knowing what your insurance (or your partner’s) covers will keep surprises to a minimum when the medical bills arrive.
And when the little one makes their appearance, you’ll want to add them to your insurance – so check out in advance how you can do that.
3. Setting up a baby fund
This is where you can put money away for your “pregnancy budget” to spend on the big purchases, e.g. the pram, car seat, or cot.
4. Starting a rainy day fund
If you don’t already have somewhere you set aside money for emergencies, it might be beneficial to start a fund now.
As we all know, little ones tend to be emergency magnets – which can make a rainy day fund useful in the end.
5. Cutting expenses that aren’t worth it
Are you using that gym membership?
Do you watch all the streaming channels you’ve signed up to?
Do a little audit before or during your pregnancy, and see if there are areas where you can save some pennies.
6. Create a baby registry
If you’re planning a baby shower before your babe’s arrival, creating a baby registry and sharing it with your guests is a must.
Add all the items you think you’ll need, and you’ll be surprised how much your friends and family will pay for.
Not sure where to start with your baby registry?
Our Peanut mums-to-be love the easy-to-use Babylist baby registry feature, with a free ‘Hello Baby’ box, the ability to add anything from any store, and 15% discount from the Babylist store.
And if, by the end of your baby shower, you haven’t got a few items, why not try second-hand (preloved) baby bits?
You can nab an absolute bargain!
Tips for after your baby has arrived
The first year after your baby’s birth will have its own share of financial demands. Here are three things you might want to think about:
7. Planning for childcare
Even if you or your partner take days off during the week, that’s not always technically “free” – because you may have a reduced household income as a result.
8. Saving for future education (or travel)
Unfortunately, college costs.
So if you want that option on the table for the future, the saving might need to start soon-ish.
And if your little one flies the nest and goes on a round-the-world hike (eek!) instead, this fund can help keep them moving.
A great tip is to set up an investment account for baby – you can even do this during pregnancy!
One of our favourites is EarlyBird – plus, if you create baby’s account now, they’ll give you $15 towards your first investment.
Then all you need to do is sit back and watch it grow!
You can even ask friends and family to contribute on birthdays and family holidays.
Or if you’re on to baby number two (or three, four, five…), you’ve probably got all the baby things you’ll need (car seats, beds, clothing, etc), so why not set up an investment account with EarlyBird instead, to get them on their way?
9. Paying for life insurance
A bit morbid, but just something that needs to be done.
10. Consider a baby clothing rental subscription
Baby clothing rental subscriptions, like Bundlee can save an average of £1,000 in baby’s first year alone.
After all, they outgrow 5 clothing sizes in their first year.
That’s a lot of onesies.
Yep, planning for a baby financially isn’t the stuff dreams are made of, but it’s an important step on the parenthood journey.
We hope we’ve given you some useful pointers.
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