Getting to grips with your finances as early as possible during pregnancy will give you peace of mind – and budgeting needn’t be a chore if you follow some straightforward steps.
Unlike many parts of being a parent, there’s one thing that’s for certain: having a baby will impact your finances. With your household income set to change, at least temporarily, and costs to consider throughout pregnancy and once your baby arrives, it’s a good idea to take stock and plan for the months ahead.
How to create a budget
The idea of budgeting may flood your veins with dread, but financial admin won’t come very high on your priority list once there’s a baby who needs attention, so laying the groundwork now will help set you up for the future.
1. Gather important information
Before you start making a budget, collect up all the relevant paperwork and research that will give you an overview of your finances right now, and help you plan for the months to come.
It will be useful to have:
- a few months’ worth of bank statements
- recent household bills
- details of any savings and/or pension contributions
- your employer’s maternity/paternity/shared parental pay policy – or info on Maternity Allowance
- details of child benefit entitlement.
2. Review your current financial situation
Look at your income over the last three months and work out the average, so you have an idea of what you’ll earn in the coming months until your baby is born.
Calculate your essential outgoings, thinking about:
- rent or mortgage payments
- utility bills
- groceries and toiletries
- travel costs, including season tickets or petrol.
Add these together, and subtract the total from your monthly earnings, for a better view of the disposable income you’ll have during pregnancy.
3. Look for ways to cut back
Consider whether you can make any short-term savings by reducing or removing unessential expenses.
This is where a proper examination of your bank statements can be a real eye-opener. All those small but recurring payments – a daily coffee or lunch at work; the unused gym membership or Netflix subscription – can soon add up.
You can also save over the course of a year by reducing household bills. Switching your energy supplier could make a big dent in your annual payments – and it should take less time to do than it takes a cup of tea to go cold (something any parent should get used to!).
Look at our money-saving tips for expectant parents to discover more ways to cut costs during pregnancy.
4. Draw up a monthly budget
Now you have all the information you need, you can create a budget to follow during pregnancy, which should hopefully help you save for the months ahead as well.
You might want to factor in any big costs that will need to be covered before the baby arrives – for example, buying a car seat and pushchair – as well as annual bills or fees like a car MOT or TV licence.
Once those one-off expenses and essential outgoings are accounted for, see what you’ll have left at the end of each month.
- More advice from Which? Money: planning an effective budget.
5. Plan for the changes ahead
It’s a good idea to revisit your budget at regular intervals, to adjust your plans based on most recent circumstances. In particular, you will need to revise your budget when the time comes to take parental leave.
Along with statutory pay, if you’ve put any money aside to help cover costs while you’re on leave, divide this amount by the number of months you plan to take off. Find out what benefits you will be entitled to as a parent as well – from work and income support to child tax credits.
Do bear in mind that day-to-day expenses are likely to change when you’re not at work. While you might save money on commuting and meals outside the home, your gas and electricity bills will probably increase when you’re spending more time indoors.
If you can, look further ahead and also consider your expectations around returning to work: when will this be; will you go back full-time or part-time; will your partner’s work routine also change? Answering these questions will help you to budget for the full stretch of your leave as well as giving you time to plan for things like childcare costs.
If you’re nervous about how much childcare will set you back, see the Which? Money article on help and support with childcare costs.
How to stay on top of your budget
It’s all well and good setting a budget, but you need to make sure you stick to it. Be realistic about how you’ll keep track of your money when you have a new baby to look after and find a format that works for you. There are various options, including:
- Budgeting apps, which let you track your spending on your smartphone or tablet as you go. Some are free, such as Money Dashboard, while others have a small monthly fee attached.
- Budget spreadsheet: create your own simple spreadsheet or use a pre-made template to keep a record of your incomings and outgoings.
- Personal finance software: a more advanced way of monitoring your budget; letting you upload information from any of your bank accounts, credit cards and investments, to gain a quick overview of your whole financial situation.
How to balance your budget: get more tips on making quick and effective savings.
How budgeting can help you with saving
Keep track of any savings (big or small) that you make along the way. If there’s anything left at the end of the month that you don’t immediately need, try putting some money into a separate account and forgetting about it.
This pot could help give you a buffer for any unexpected costs, boost your bank balance during parental leave when your income is lower, or build up funds for your child’s future.
If you do decide to go down this route, make sure you’re using a savings account that gives you both good interest and the flexibility you require (for example, one that lets you move money over when you need it).
Get clued up on different options and the best providers with Which? Money advice on finding the right savings account.