Having and raising a child is expensive, but even single parents with a low income can manage. How is that possible? Let’s review.
Average UK costs of having a baby
Thanks to the NHS, the cost of having a baby in a hospital can be free, including all antenatal, birth and post-natal care. That being said, the average out of pocket costs of a baby in the UK in its first month is over £500, and about £11,500 in the first year according to some studies. Most of this is spent on things like toys, furniture, baby clothes and nappies. Most new parents are not prepared for this.
In addition, about half of what parents spend on their child goes towards childcare. The average UK cost to send a child under two years old to nursery is £122.46 per week part time and £232.84 per week full time. Age three and four are free in the UK.
Tips on how to mitigate costs
Babies don’t need to break the bank. Here are some ideas to build savings for a baby and keep the cost of a baby down.
Buy what you can afford. On average, parents spend £1,000 preparing for their first child. This includes costs of a cot, pram, baby monitors, car seats and other essentials. Prices span significantly and can be quite costly at the high end. But cost isn’t necessarily indicative of quality or safety – all products must pass the same inspections to retail in the UK. So shop affordably.
Tip: The Money Advice Service has a baby costs calculator that can help you visualise your budget. Many of the line items may not be on your radar in early the baby-planning stages.
Use the second hand market. Often, the items you are looking for can be bought second hand at significant discounts. Babies grow quickly, after all, and toys, cots, clothes and more may have little to no wear and tear. And when your child outgrows something, sell it on eBay to reclaim some of the costs.
Use government support. Government support such as a Child Benefit, Child Tax Credit and Childcare Tax Credits are available for each of your children up to the age of 16. There are also extra benefits for working and non-working parents to lessen the financial blow and encourage healthy lifestyles for parents and baby. Many can be claimed before the baby is due. See more about those parental benefits here.
Budgeting for a new baby
If you are budgeting for a baby, you want to first plan for the impact on your monthly budget. On average, 29% of parents’ gross annual income goes towards baby-related expenses. Try to consider how your current budget will look if nearly a third of your gross income were diverted today. Would that be comfortable? Probably not.
That’s why, as soon as possible, it is wise set up a new budget that accounts for baby expenses and to practice sticking to it. Aim to set aside 29% of your monthly income or £500 per month. In the months leading up to birth, you can use that monthly diversion to fund upfront costs.
We hope things are starting to level out again Ewan!
Tip: Want to know how much does a baby cost upfront? Use the baby cost calculator to determine what you can expect. If the total cost exceeds what is in your account, or what you plan to divert in the months leading up to birth, make adjustments to your expenses or your savings plan, or both.
Another tip: To create and stick to a budget, use an app like Money Dashboard. The app will automatically tag all your spending by category, making it easy for you to see where your money is going and where you can cut back spending. You can also use the app to set and track saving goals and spending parameters by item or by category. Ultimately, this will provide you with visibility and control, two essential ingredients for successful budgeting.
More articles on managing money as a parent from the Money Dashboard Blog:
Is it ok to borrow from your kid's piggy bank?
8 money lessons to teach your kids before it's too late
Managing money with a partner when you're expecting