Starting a family

When you are starting a family, people often tell you that your life will never be the same again. There is a lot of truth in that when it comes to money. As soon as a baby is on the way, you have to think about how you are going to cope with the extra costs that having a child will involve. At the same time, with a baby to look after, you might need to cut down on the amount of work you do, which means bringing in less money.

Step 1: Before the baby arrives

As soon as you know that there is a baby on the way, it is a good idea to get planning.

Find out what benefits and tax credits you will get: It is very difficult to make decisions about your future before the baby arrives because you do not know how you are going to feel and what your life is going to look like. However, you can help yourself prepare by finding out as much information as possible.
If you work, you should talk to your employer as soon as possible. Your employer cannot sack you just because you are pregnant. By law, when you are pregnant, you can take time off for scans and other medical appointments. You may also find that your employer offers extra maternity and paternity benefits
When the baby is born, you will need to take some time off work to look after it. Both parents have the right by law to take time off, and there are various benefits available to help you do this. How much time and money you get varies. Your contract of employment may give you more rights to paid maternity and paternity leave than the legal minimum. See the section for Women who are pregnant or have just had a baby and their partners. The Directgov (link opens in a new window) website also has more information on this, as well as details on support available if you are adopting (link opens in a new window).
If you do not work, there are still benefits available to you when you are pregnant and have a family. See the section for Women who are pregnant or have just had a baby and their partners.
If you are in a relationship, it is important to talk about money and other things that have financial implications, such as taking time off work or even giving it up. If you have kept your money relatively separate from one another up until now, bear in mind that this is likely to change when you start a family
Make a budget: If you do not already have a budget, think about making one because it will help you get to grips with how much money you are spending and what you are spending it on. Once you know this, you will be in a good position to see if you have any money left over that you could save towards the cost of your baby. Your budget can also help you identify areas where you can cut back on spending so that you have more money to put aside. See Budgeting and Saving and investing. Our Money Saving Tips may help you make cutbacks
Talk to people who already have families and to professionals such as midwives when you are putting together your list. This is because there are many baby products available, but only a small number of them are actually necessary. Because babies grow so quickly, you can also usually get good quality secondhand clothes and other items, which will help you save money. Make sure they are safe, for example, the safety features on high chairs and cots still work. It is also recommended that you do not buy secondhand car seats. Some people qualify for a grant to buy things for the baby – see the section for Women who are pregnant or have just had a baby and their partners.
Moving home: Many of us also find ourselves having to move home at the same time that we are starting a family because we have outgrown our old home or perhaps want to live in a different neighbourhood. We have a section on buying a home that can help you.

Step 2: Once your baby is here

Once your baby has arrived, you will be in a better position to work out what your new life is going to look like and how you will manage.To help you come to a decision, it’s important to:

Decide whether to return to work: For most of us, the question of whether we should work or not is quite complicated and not usually just down to how we feel.
Some people have to return to work in order to make ends meet
Others find that childcare costs gobble up their wages so there is not much point in returning to work If you are in a relationship, there is also the question of who should work and who should stay home or whether, perhaps, you could share the responsibility of childcare, with both parents working shorter hours.
Look at different childcare options and their costs. The BBC website (link opens in a new window) has a good overview
Check if your employer offers anything like childcare vouchers or even a company crèche
Find out if you are eligible for any benefits, tax credits and other financial support if you return to work. See Women who are pregnant or who have recently had a baby and their partners and People with dependant children. Remember you have a legal right to ask for flexible working hours. The Directgov website (link opens in a new window) has more information on this
Look closely at how you will support yourself if you do not work. See our section Women who are pregnant or who have recently had a baby and their partners
Directgov has information on financial support for parents and children (link opens in a new window). Revisit your budget – make sure your budget is up to date and takes into account any changes to your income and outgoings
Revisit your budget: make sure it is up to date and takes into account any changes to your income and outgoings.

Step 3: Planning for the long term

Savings: Most of us want to provide financial security for our family. We also want to be able to give our children opportunities, buy them nice things and take them on holidays. All this costs money, which is why it is a good idea to get into the habit of saving if you can. See Saving and investing.
Child Trust Fund: All babies have savings as soon as they are born these days because of the Government’s Child Trust Fund. The money belongs to your baby but you decide how to save or invest it. When they reach the age of 18, they can spend it on what they want. See Child Trust Funds.
Life insurance: When you have a family, your children depend on you so it is a good idea to think about taking out life insurance. This pays out if you die so your family will have some financial security. See Insurance.

Step 4: Would you like to find out more?

Are you a single parent?

If you are a one-parent family, most of the information above applies to you but you will of course face additional challenges:

You may be covering all or more of the costs the come with families
You are likely to be taking all or more of the financial decisions alone
Juggling work and other commitments with childcare is usually more of a challenge when there is just one of you
You will probably need to sort out maintenance payments and other arrangements with your child’s other parent.

Further help for one-parent families

You may get more benefits and tax credits than if you live with a partner. See People with Dependent Children in Benefits
Gingerbread (link opens in a new window), the organisation for lone parent families, has an enormous amount of information and a telephone helpline. Their fact sheets relate to England and Wales only
Credit Action, a money education charity, has a money manual (link opens in a new window).
Specific support for fathers is available from the Fatherhood Institute (link opens in a new window)

Are you a young parent?

As a young parent most of the information we have discussed applies to you too but there are also additional challenges that you are likely to face. For example:

Money could be more of a problem
You may not have the support of a partner
You may need to find somewhere to live or will perhaps be responsible for running your own home for the first time
You may still be in education or would like to return to your studies to help build a future for your family.

Further help for young parents

The benefits you receive can differ from those received by older parents. See Young People in Benefits
The Site.org (link opens in a new window), a website run by a charity called Youthnet that supports young adults, has a section on pregnancy and parenthood for young people, with information specifically for young mums

General information

Parentline Plus (link opens in a new window) is a national charity working for and with parents
Directgov (link opens in a new window) has a section specifically for parents.

Last updated: 24 August 2010

Turn2us - to access benefits & grants.