The total cost of bringing up a child today from birth to the age of 21 is estimated to be a massive £180,000. This includes baby equipment, childcare, clothing, food, education (including university), travel and entertainment. More than £4,000 of this total is spent in the first year alone, and childcare costs increase the financial responsibility if mum decides to return to work.

Couples are therefore very wise to start thinking about finances and budgets before the little sparkle in their eyes becomes a reality. It may seem a bit early to start thinking about finances up to six months before you start trying to conceive, but such early planning will ensure that you have at least a year to save before you need to make expensive purchases for baby’s nursery, and will also ensure enough funds for mum to be pampered and have treats!

If you are currently a joint salary household you may have to budget for a reduction in income during maternity leave, particularly if mum decides not to return to work. Couples should take into account the following financial commitments when budgeting for baby’s arrival:

• Mortgage repayments
• Loan repayments
• Life insurance
• Utilities e.g. council tax, electricity, gas, water
• Essential baby items e.g. furniture, clothes, food
• Holidays!

However, you won’t be alone – the government and your employers can help to ease your financial worries. Planning ahead will also reassure you that you have enough to cover the bills and enjoy this new phase of your life. So what can couples do to ensure peace of mind before baby arrives?

budget for your bump

Create a budget for your living expenses before baby arrives, and another for after your baby is born. Check out our useful sites page for details on websites that offer spreadsheets to download. This will help you to calculate your income and outgoings each month, before and after baby is born.

save tax-free

Open a mini ISA and save up to £3,000 cash or £4,000 in stocks and shares each year tax-free, or apply for a Maxi ISA to invest up to £7,000 a year tax-free (of which £3,000 can be invested as cash). This saves you paying 20% tax on interest from your savings if you are a basic rate taxpayer, or 40% if you’re a higher rate taxpayer.

pay more now 

Depending upon the flexibility of your mortgage, consider paying more than your usual monthly repayment in the year leading up to baby’s birth, so that once baby arrives you can opt for a repayment holiday or a lower monthly repayment for a few months. Alternatively, if your mortgage provider is not flexible then save some money in an online easy-access savings account that pays a high interest rate. You will then be able to transfer funds across easily and quickly if you find yourselves struggling with mortgage repayments when baby arrives.

pension priority 

Pay extra into your pension for at least six months if you think you won’t be able to afford contributions when your baby arrives. In a recent study it was found that more than half of new mums stopped contributing towards their pension when they took a career break to raise children. This means at retirement age the woman is likely to have a lower pension than her partner. Couples should allocate some of the household income to the woman’s pension which will be more tax-efficient than contributing more to the man’s pension.

baby benefits

Find out if you’re eligible for any benefits e.g. Sure Start Maternity Grant gives you £500 if you or your partner receive a low income benefit or tax credit. This makes a nice contribution towards baby equipment and decorating the nursery, or save it for a few months and use it once baby arrives. You can claim for the grant from 11 weeks before the week your baby is due, and up to 3 months after your baby is born. Visit www.surestart.gov.uk or www.jobcentreplus.gov.uk for more info.

take your boss to lunch! 

Discuss maternity leave with your employer. You may be surprised to find that they are very flexible and have a generous maternity scheme in place. In theory, pregnant women are very well protected by the law. However, the Citizens Advice Bureau, which many thousands of women contact for advice on maternal rights each year, state that hundreds of women are illegally dismissed or threatened due to pregnancy and requesting more flexibility to raise a family. If you feel that your employer has unfairly discriminated against you, there are several organisations you can contact. Click here to go to our useful sites page.

bitesize payments

If you work out what you are going to need six or seven months before your baby is due then you have quite a long time to pay for the essentials. This is far more sensible than paying for everything by credit card as you may never get round to paying off your credit balance, and high credit card repayments are the last thing you want to be worrying about on maternity leave. However, if you put aside a small chunk of your salary each month, by the time munchkin arrives you will have a beautiful nursery and a healthy bank balance!  

milk the freebies 

Take advantage of free stuff! You can get a free gift pack from Lloyds Pharmacy and free pregnancy magazines from the National Childbirth Trust. If you receive Income Support, you can get free milk vouchers and vitamins during pregnancy and free baby milk once baby arrives. NHS dental treatment is free for all mums during pregnancy and for a year after your baby is born. You don’t have to pay for any prescriptions either. Another way to save is to join baby clubs (a lot of companies, particularly supermarkets) have them. You will get lots of vouchers and possibly some extra loyalty points by signing up.

the pressie planner

Ask friends and relatives to group together to buy one big item rather than buying lots of small toys. You could even register for a baby list so that prospective gift buyers can look up what you really want, like a wedding list. Also, ask friends and relatives if they have any items they would be willing to lend for a few months. If a friend has just had a baby they are likely to have lots of baby clothes that their baby will have already outgrown. They will also need extra storage and may be glad to let you take care of equipment and clothing that they might not need for a few years until they have another baby!

give up the gremlins

Cut down on smoking and drinking. Doing this will not only save you a huge amount of money each month, it may also improve your chances of conception, not to mention giving your baby a fresh, pleasant smelling home to grow up in. Why not put that £5 you would be spending on cigarettes or alcohol each day into a piggybank so you can treat yourself to a pampering session when the sleepless nights start?!

secondhand can be super 

Search on Ebay and other auction sites for reduced baby equipment or secondhand items. You may be able to cut your equipment costs by half the amount you would pay on the high street. However, there are some items that you should never buy secondhand e.g. car seats and mattresses.

remember ...

budgeting is key to understanding your financial situation. You should know how much you have coming in and how much expenditure you have going out. When you know that you have enough income to cover the essentials (e.g. mortgage and food) and a few treats then you can relax. Don't be tempted to put everything you want, but can't afford, on credit as your finances will only get tighter when baby arrives!