Top financial tips for planning and raising a family

For the baby years

Work out how much extra cash you’ll need

If one or both of you is taking parental leave, your household income is likely to be a lot lower than usual for that period. Check your company’s maternity and paternity pay policies and then work out how much your net (after tax) household income will be for that first year.

The difference between this and the amount of disposable income you currently earn annually gives you a rough idea of how short of cash you’ll be for the first year of your baby’s life. Try to save an amount equal to this shortfall for the first year before your baby is born.

Check your holiday allowance

If you want to extend the period for which you receive pay by as much as possible, consider adding any holiday allowance you have from your employer for the year to the beginning or end of your leave period.

Don’t buy something until you know you need it

It’s easy to get sucked into the marketing of baby wear, toys and furniture, but most of it’s unnecessary. Some things you do need, like a buggy, nappies, baby grows and somewhere for your baby to sleep safely, however there are plenty of things you might be tempted by which are avoidable.

Buy second hand

The quality of second-hand baby clothes and toys is usually good, because they’ve probably had little wear. Ebay, Freegle, Freecycle and Gumtree are great places to find hardly used baby things for a fraction of the full price, as are National Childbirth Trust (NCT) sales and local charity shops. Toy libraries are a great way to avoid the cost of new toys too.

For future goals

Have savings pots for Christmas and holidays

The hardest things to manage when budgets are squeezed are one-off large expenses, such as Christmas and holidays. Every year, work out what you can afford to put aside each month towards each of these short-term goals and set up a savings account for them.

Try to start saving for your child as early as possible

The earlier you save, the more chance that money has to grow. You and your relatives can save into Junior ISAs, which are transferred into your child’s name when he or she reaches 18. Or you can use your own ISA allowance to save for your children (up to £20,000 a year tax-free in the 2019-20 tax year).