Cost of having a baby
There’s no doubt that bringing up a child is one of the most rewarding experiences life has to offer, but having kids is an expensive business.
The average cost of raising a child until they’re 18 (as of 2019) is £75,436 for a couple, which works out at £4,190 a year, according to figures from the Child Poverty Action Group (CPAG) and insurer LV=.
It’s even higher for a single parent at £102,627.
As if money worries weren’t enough, a survey by OnePoll (on behalf of Mead Johnson Nutrition) discovered mothers spend over 1,400 hours of their baby’s first year worrying about their health – that’s around two months of fretting!
But there’s too much to enjoy to let anxiety take over, so if you’re expecting a new arrival any time soon, here are some key considerations that could help ease the pressure of parenting.
Financial assistance
While having a baby is a huge, life-changing milestone, it can be very expensive, particularly if the pregnancy wasn’t planned and you’ve not managed to budget and save for its arrival.
The bad news is you’ll most likely have to cover extra costs on a reduced household income, but the good news is there’s lots of help available, including benefits and grants from the Government and possibly your employer.
Maternity Pay
The amount of maternity pay you (or your partner) gets, and for how long you get it, varies from one employer to the next.
So, when budgeting it’s probably best to work on the assumption that you’ll be getting by on one salary and then anything extra is a bonus.
If you’ve worked continuously for your employer and qualify for Statutory Maternity Pay (SMP), then you can be paid for up to 39 weeks, usually at the following rates:
- The first six weeks will be paid at 90% of your average weekly earnings (before tax)
- The remaining 33 weeks will be paid at £151.20 or 90% of your average weekly earnings (whichever is lower)
Income Tax and National Insurance will also be deducted.
If you’re an agency worker, a director or an educational worker, you may have different entitlement rules, which you can find out more about here.
If you’re self-employed or haven’t worked for your employer long enough to get maternity pay, you may still qualify for Maternity Allowance – find out more and how to apply here.
And it may sound daft, particularly if you’re carrying a great big bump around with you, but you won’t get SMP unless you give your employer proof that the baby is due.
Get a letter from your doctor or midwife, or an MATB1 certificate if there’s less than 20 weeks until the due date and give it to your employer within 21 days of your SMP start date, or as soon as possible if the baby is early.
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Maternity leave, paternity leave and shared leave
For mothers
You may not realise it, but it makes no difference how long you’ve been with your employer, how many hours you work, or how much you get paid.
You will qualify for Statutory Maternity Leave (SML) as long as you’re an ‘employee’ not a ‘worker’ (you can find out what the difference is here) and you give your employer at least 15 weeks’ notice before your due date.
SML last for 52 weeks and comes in two parts - Ordinary Maternity Leave (OML), which makes up the first 26 weeks, and Additional Maternity Leave (AML), which makes up the last 26 weeks.
You don’t have to take the full year, but you must take at least two weeks’ leave after your baby is born, or a minimum of four weeks’ leave if you’re a factory worker.
The important difference between OML and AML is the right to return to work once your leave ends.
If you return to work at the end of your 26-week OML, you have the right to return to your old job.
If you go back at the end of AML, while you still have the right to return to your old job, you may be offered an appropriate similar role if it’s not reasonably practicable for the employer to offer you your old job back.
The new job must be offered on the same or better terms, and your seniority, pay and pension conditions must not be affected.
For fathers
As for the dads out there, you’ll still only be eligible for one or two weeks paid Paternity Leave (note that most agency or contract staff aren’t eligible).
To qualify, you have to tell your employer the due date, when you want the leave to start, and how long you’ll be taking off, at least 15 weeks before the baby is expected.
To qualify for Paternity Pay, you need to give your employer an SC3 form, or their own version of this, at least 15 weeks before the due date.
Alternatively, both parents can now take Shared Paternity Leave, you can find out all you need to know at GOV.UK.
Benefits you can claim
There are also several benefits available during and after pregnancy, including free NHS prescriptions and dental care for women who are pregnant or gave birth less than a year ago, so it’s worth scheduling any dental appointments to make the most of that.
To claim, you’ll need to complete a Maternity Exemption form (FW8), which you can get from your doctor or midwife.
Child Benefit is available to anyone responsible for a child under the age of 16, or under 20 if they’re in full time education or training.
Child Benefit is paid at a rate of £21.05 a week for the eldest or only child and £13.95 a week for any other children, which will rise to £21.15 and £14 per week in the 2021/22 tax year.
You can claim by completing a CH2 form, but be aware that if you or your partner earn more than £50,000 a year, you have to pay back some or all of your Child Benefit through additional Income Tax payments.
The Money Advice Service has some useful information for benefits available if you’re on a low income or claiming other benefits, paid time off for antenatal care, and benefits if you’re studying when you get pregnant.
Returning to work
If you’re not lucky enough to have a family member help with childcare, you could be faced with some crippling costs and tough decisions over whether it’s even financially viable to carry on working.
When weighing up the pros and cons, look at the long-term effects leaving work could have on future earnings – if your earnings potential could suffer significantly from taking a sabbatical, it could be worth staying in work and taking a hit on childcare costs, even if they eat up most of your salary.
It’s also worth talking to your employer to see if you can reduce your hours or have more flexible working hours.
Anyone can now request flexible working hours provided they’ve been with their employer for six months or more. It can’t hurt to ask!
20 money lessons every kid should learn
Budgeting for a baby
Every penny counts when there’s an extra mouth to feed, so as soon as you find out there’s a baby on the way, it’s time to get number-crunching and work out a realistic budget that at least covers the rest of the pregnancy and your baby’s first year.
You’ll need to cover everything from extra food and clothing for the baby, maternity clothes, buggies, car seats, cots, toys and the cost of decorating the baby’s room.
And while it’s tempting to go all out and buy everything the retailers throw at you, it’s important to just get what you can afford and equip yourself with the essentials.
You should also start saving as soon as possible to make up any shortfall in salary and take the opportunity to reassess your household budget and think of ways to cut the cost of your monthly outgoings.
This could be something as trivial as cutting down on takeaways, or as impactful as completely cutting out alcohol.
Read: how to build up an emergency savings fund
The Money Advice Service has some great ideas on budgeting when you’re pregnant. Then there’s the small matter of how much space a baby and all associated paraphernalia take up in your house.
You won’t believe how much stuff they come with, so take the opportunity to clear the house of clutter and sell off anything you no longer need or want to make some extra cash.
Being a parent
Literally everything changes when you become a parent – your priorities, your outlook on life, and even your identity.
Still, it’s important to make sure your baby becomes a part of your life and fits into your lifestyle, rather than making jarring changes that could have a negative effect on relationships with your friends and family.
So, a bit of forward planning can take away a lot of stress so you can really enjoy the fun stuff.
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