Baby budgeting — how to make your money go further

Having a baby is one of the most exciting and rewarding things you’ll ever experience. It can also, without proper planning, be one of the most expensive. The loss of an income, even temporarily, can put a bit of a dent in your bank account. The good news is there are still lots of ways to boost your baby budget.

Financial healthcheck
Start your ‘financial healthcheck’ by finding out how much maternity pay you’ll get. You can take a year off work but you’ll only get maternity pay for nine months, and that’s providing you’ve worked for the same company for at least six months.

Some companies are more generous than others with maternity pay so speak to your human resources department first. As a general rule the basic minimum is 90% of your average gross weekly earnings for the first six weeks, followed by £117.18 for the next 33 weeks. Bear in mind though, you’ll pay tax and national insurance on your maternity pay as you would with your regular salary.

If you’ve worked for a company less than six months or are self employed you’ll need to claim Maternity Allowance, worth £117.18 a week and paid for 39 weeks. You can download a claim form at www.jobcentreplus.gov.uk. Dads can also get paternity pay from their employer, which is up to two weeks wages, so get your partner to sort this one out.

Don’t lose out
After your baby’s born make sure you apply for child benefit as payments are only backdated up to three months, so don’t lose out! You’ll get £18.80 a week for your first child and £12.55 for every other child. Payments are made until age 16, or longer if your child’s in full time education.

Next up on the paperwork trail is filling in your claim for Child Tax Credit. This is tax free cash with payments based on your family income, and while wading through the tax credit forms isn’t the most exciting part of becoming a parent, it is a necessary one as payments can only be backdated for three months.

One short term solution to adjusting to a reduced salary is taking a mortgage holiday. If you’ve got a good track record some lenders will let you suspend payments for up to a year. While you’ll still have to repay those ‘unpaid’ months, this can be added to your loan which may mean a minimal monthly increase over a fifteen or twenty year mortgage term. This can give you some much needed breathing space. If you’re really struggling speak to your lender or get help from Citizens Advice.

Right now your baby’s first car, house or university education will seem a long way off but now is the time to start saving for your baby’s future. The Child Trust Fund scheme helps kick start their savings with a voucher worth £250 or £500 (depending on your family income) when you apply for child benefit, and another one on your baby’s seventh birthday. Vouchers can’t be ‘cashed in’ and can only be used to open a special Child Trust Fund account; either a savings account, or a share-based account where the money’s invested in the stock market. Family and friends can also pay in up to £1200 a year and all profits are tax free and safe till your child turns 18.

If you’re planning to return to work after your baby’s born, childcare costs can take a big bite out of your salary - typically around £150 a week - so I’d suggest finding out if your employer is a member of the Childcare Vouchers Scheme. This Government-backed scheme means you can claim vouchers from your employer worth up to £55 a week which you can use to pay for registered childcare such as nurseries, playgroups and childminders. If both you and your partner are employed you can double your money if you both claim the vouchers.

Financial Checklist

• Keep a money diary to see what you’re spending and where you can make savings. Cutting out one take-away coffee per day saves £50 a month!
• When bills hit the mat always check you’re on the best deal. Cut costs on mobiles, credit cards, insurance and utilities by shopping around using internet comparison sites.
• Claim Child Benefit using the form in your Bounty Pack or download a form online at www.hmrc.gov.uk/childbenefit
• Get your Child Tax Credit claim pack from the tax credits helpline on 0845 300 3900.
• Child Trust Fund Helpline 0845 302 1470