How To Manage Your Finances When Your Little One Arrives Home

Bringing your little bundle of joy home for the first time is cause for celebration. Amidst all the excitement and cooing visitors, however, it’s easy for the financial implications to take a back seat. A growing family signals greater financial demands, and the extra costs associated with raising a child can cause problems if left unaddressed. Money management is essential to making a harmonious and stress-free shift into family life.

Financial planning is a tricky task which all parents have to tackle at some point. Thankfully, keeping the lights on and food on the table for your new family is achievable with careful money management. From curbing spending to money-saving food and clothing hacks, savvy parents can keep on top of their cash-flow while ensuring their new arrival doesn’t go without.

1. Cut Down Non-Essential Costs

Trimming the fat off expenses is the first step towards relieving the additional financial pressure. A new baby shifts your priorities, presenting opportunities to kick non-essential purchases out of your monthly budget. Balance outgoings alongside your household income to locate areas for curtailment. Gym memberships gathering dust, costly weekly takeaways, one night out too many – it’s surprising how quickly life’s little extras can add up. Evaluate where your money is best spent and hold back your outlay for essentials.

2. Get on Top of Debts

Being shackled by credit card debt or high interest repayments can take a huge chunk out of your revenue. At a time where your household income is likely limited by reduced maternity or paternity pay, debt payments are more unwelcome than ever. Making ends meet can be a struggle once your baby has arrived, particularly with mounting debt looming large.

Take time to rigorously analyse your situation and how much you can realistically afford to pay. If possible, pay off your largest debt as a matter of priority. Consider speaking to a professional financial advisor to receive some support or look out for balance transfers or interest-free overdrafts which reduce monthly payments.

3. Set A Strict Family Budget

Getting to grips with a stringent budget for your newly expanded family is essential, helping to set the financial foundations to support your little one. Once you’ve identified what’s essential and what isn’t, find exactly how much you have to spend. Taking on the habit of money management through budgeting gives you control over the financial future of your family.

Related: Top 10 Money Saving Lunchbox Ideas

Spending trackers and budgeting apps, such as Mint, give parents a helping hand, pointing them towards financial stability by segmenting their spending habits. Having a tightly planned budget helps you squeeze every last penny for your child’s needs, keeping a close eye on all outgoings in the process.

4. Understand Financial Help Entitlement

While entitlement to financial help is circumstantial, it could be the monetary boost that your new family is crying out for. Gaining an understanding of the multiple family support schemes on offer, and finding those that you qualify for, can give a leg-up when you need it most. Apply for relevant benefits as your little one settles into the family home. They’re in place to provide breathing space by contributing to the costs of having an extra mouth to feed, making this transitionary period smoother.

Related: Financial Support & Benefits for Parents

All parents who earn less than £60,000 a year are entitled to weekly child benefits of £20.30 for their first child (dropping to £13.40 for additional children). If you’re struggling with a particularly low income, or are currently unemployed, you may also be eligible to claim Universal Credit. New parents on Universal Credit could also be in line for a one-off £500 Maternity Grant to help cope with additional costs. There are many useful services, such as Citizens Advice, who are on hand to walk new parents through the claiming process.

5. Create an Emergency Fund

Rainy days may feel like a far-gone thought amidst the wonderment and joy of a new arrival. Things often don’t go to plan for parents, however, and keeping any extra cash tucked away helps you expect the unexpected. While you may not be able to achieve this from a reduced pay packet, shrewd thinkers can find ways to divert outgoings into saving accounts.

Like a large portion of the population, many new families inadvertently pay too much for household bills. Hunting for the best utility deals can shave hundreds off your monthly expenditure. Placing extra money from savings such as these into an ISA account will accrue interest and grow a healthy back up fund for those additional costs that crop up along the way.

6. Protect Your Finances with Insurance

It’s a parent’s instinct to protect their child. Ensuring you’ve got suitable insurance in place provides a safety blanket should circumstances take a turn for the worst. Income protection insurance is an important measure to take out. This type of insurance replaces a section of your income should you become too ill to work. While many employers offer income insurance as a benefit, checking that your covered can save a headache down the line.

If you’ve kitted out your child’s room with creature comforts and valuable items, you may also need to revisit your home contents insurance. Take time to check that all new purchases are accounted for. There may also be items of sentimental value associated with your child which you’ll want to ensure are protected against damage and theft. Having adequate content insurance in place can prevent dipping into your funds, while also giving peace of mind.

7. Shop Second-Hand and Borrow

Babies grow in the blink of an eye. For this reason, second-hand clothes are a must for the cash-conscious. Many parents fall into the trap of cute yet expensive outfits which only see the light of day on one or two occasions. These are often sold on to second-hand bargain hunting parents. The same can be said for toys, with children’s tastes changing like the wind. Picking up age-appropriate toys on the cheap during their formative years will save a fortune in the long run.

Don’t underestimate the kindness of family and friends either. Chances are that your fellow parents will have some hand-me-downs that they’d be more than happy to loan out. Asking for this sort of help is nothing to be embarrassed about, with the second-hand route proving a popular money-saver among new parents.

Want to know more about how you can manage your journey through parenthood? Head back to the Parents Finance Guide Hub for more helpful information!