Mommy Money: Financial Advice Before the Baby Comes

Having a baby in the UK is an expensive proposition. According to CNBC, in the United Kingdom, it currently costs about £1670 for a vaginal delivery or planned C-section and £2,500 for a more complicated procedure. But the cost of the birth itself is not the expensive part of expanding your family. You will be out of work for a time, and then if returning to work, you must make arrangements for child care.


Financial Advice Before the Baby Comes

This article will help you prepare financially for this addition to your family.

Find Out About Your Maternity or Paternity Pay

If you have been working at your present company for 26 weeks or more and earn more than £95 per week, you will be entitled to statutory maternity or paternity pay, referred to as SMP. For the first six weeks, you will receive SMP in the amount of 90% of your average gross weekly earnings. Over the following 33 weeks, you will receive whichever is lower, £151.97 a week or 90% of your weekly pay.

Contact your human resources department to find out what maternity or paternity pay you are entitled to or consult your employment contract. This way, you can save and budget for your baby’s arrival and the weeks following.

Start Saving and Craft Your Household Budget

You and your partner, if you have one, should begin saving as soon as you know you are pregnant. This way, you will have some funds set aside to help make up for the drop in income in the weeks following the birth of your baby.

If you have not done so, sit down and craft a household budget, keeping in mind that you are about to be living on your maternity or paternity pay, plus one income if you have a partner and they are employed. Start living on that reduced amount now to get used to it, and you can save the remainder of your earnings up to the baby’s birth.

Apply for the Health in Pregnancy Grant

If you are at least 25 weeks pregnant, you can claim your one-off, tax-free payment of £190 from the government. The purpose of this grant is to help mothers-to-be stay healthy for their birth. All you need is a claim form signed by your midwife or doctor to send to HM Revenue & Customs.

Financial Advice Before the Baby Comes

Make a Will

You may think you are too young to think about your will, but nothing could be further from the truth when you have a baby. A will is designed to protect what is valuable, and what is more valuable than a baby?

Rather than use an inexpensive DIY will kit or a service online, hire a solicitor who can advise you on what the will must provide in order to get the result you want.

Sell Unused or Unwanted Items to Make Money and Space for the Baby

This is the time to get rid of clutter and make some money doing it. Supporting a baby is not cheap, so sell whatever you no longer use or what does not fit.

Purchase Life Insurance

You, and your partner, if you have one, should both be insured in case something happens to either of you to continue to provide for your child financially. Consider purchasing a life insurance policy that pays out an annual tax-free income rather than a lump sum, known as a “family income benefit,” so that the money is paid out over several years rather than in one lump sum.

After the Birth, Apply for Your Child Benefit

When your baby has arrived, you should make time to apply for child benefits. The government will only backdate child benefit payments by three months, so it is best to get your form in as soon as possible. You can find application forms at the Directgov website.

By claiming your Child Benefit, you can get National Insurance credits that count towards your State Pension. Your child will automatically get a National Insurance number when they’re 16 years old. For this reason, even if you choose not to apply for Child Benefit payments, you should still fill in and send off the claim form.

Keep in mind that you may have to pay back some of your Child Benefit if your or your partner’s income is over £50,000.

One You Get Your Child Benefit, Open a Trust Fund for Your Child

After you have applied to receive your Child Benefit, the government will send you a £250 voucher to invest in a child trust fund (CTF). A CTF is a savings account that remains tax-free until your child turns 18. The government will send you another £250 when your child turns seven. Make regular contributions to your child’s CTF, and your child can use those funds to attend university when the time comes.

About the Author

Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works with Heidi Villari, Esq., a noted birth injury lawyer.


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