13th May 2015 at 11:15am
If you’re a new parent you’ll want to splash out on your precious little one. But what you spend can add up to a lot more than you might have anticipated with some estimates suggesting that a baby’s first year can cost its parents an eye-watering £7,200*.
Starting a family is undoubtedly one of life’s biggest events but it doesn’t need to break the bank. Here are our top tips to help you get financially prepared.
Spend wisely and save where you can
It’s tempting to want to buy your baby the best of everything and treat them like your very own little prince or princess. Prams can cost £600, then there are the car seats, cots, nappies and clothes – the list is seemingly endless.
The reality is you don’t need to buy everything out there and it’s more practical to spend your money on expensive items such as prams and nursery furniture when you want or need to and make savings where you can.
Changing tables are good for your back but can be costly. Many parents admit they don’t use them much and opt for the quicker, easy option of a changing mat on the sofa. Moses baskets are outgrown in weeks so why buy a top of the range one?
When it comes to clothes, babies really don’t care, and grow so fast, that it makes sense to avoid expensive designer outfits and go for practical, cheap all-in-ones which can be hot-washed – and for those first few months they are certainly going to need it! And, as any new parent will tell you, the amount of hand-me-down clothes and baby items you get passed on to you can be a godsend.
Buy some items second hand on eBay or Gumtree and sell things when you don’t need them any more to make money back.
And do bear in mind that if you spend on your credit card, you could still be paying things off long after you’ve any use for them.
Budget for a drop in income
Most couples will need to prepare for a drop in income as one of you will have to leave work, at least temporarily, but you can cushion the blow by being financially prepared.
Babybudgeting.co.uk blogger and author Becky Goddard-Hill advises getting on top of your finances before your baby is born.
“Creating a budget early on, you can monitor your expenses more closely and spend wisely in the coming months before your baby’s birth,” says Becky, whose books include ‘How to afford time off with your baby’ and ‘100 easy ways to be a thrifty family’.
Work out what are necessities and where you can cut back on non-essentials such as eating out – which is unlikely to be high on your to-do list anyway when you’re dealing with sleepless nights with a newborn.
Check your employer’s parental leave policy so that you know how your finances are likely to fare during any leave from work and weigh up who is going to use the parental leave. This can now be shared by both parents under new Government rules. You can find out more about these here.
Cut costs with childcare vouchers
Check whether your employer, or your partner’s, offers a childcare voucher scheme which saves you tax on your salary. Childcare vouchers can help pay nursery, holiday club and after school fees and could save you thousands a year until your child is 15. They are linked to any tax credits you get so make sure they work for your financial circumstances.
While you’re on parental leave, find out whether you’re able to get tax credits based on your reduced income.
You can find out more about childcare vouchers here.
Saving for your child’s future
When it comes to saving for your child’s future, the sooner you can start, the better. Costs will inevitably arise out of the blue over the coming years; from school trips, dinners and uniforms, to holidays and further education.
It might seem like a lifetime away now but your child might be thinking about going to university in what seems like the blink of an eye. With the average cost of sending a child to a university in London at over £23,000 a year**, it’s worth starting when they’re very young.
Parents can save up to £4,080 for their children up to the age of 18 through a Junior ISA with any gains are free of tax. That’s £340 a month you can set aside, meaning you’ll have a sizeable sum by the time they are 18. But it’s their money so if you’re worried about them getting their hands on it at the age of 18, you could choose to save inside your own ISA instead. That way, you stay in control.
Read more about saving for children here.
Keep in touch with other parents on social media
Last but not least, online forums and websites can be a lifeline for new parents to pick up tips and advice on everything from parenting styles and saving money, to dealing with colic and finding special offers on baby essentials. Mumsnet is the best known but many supermarkets have online baby clubs which are well worth taking a look at.
*Figures from Money Advice Service
**2013/2014 data from the National Union of Students
This blog and any responses to comments are not financial advice. Standard Life is not responsible for the content on any external websites. Tax and legislation can change in the future and this represents our understanding of the rules in May 2015.