Having a child is both life's greatest joy and one of its most significant financial events. The families who navigate new parenthood most smoothly financially are those who plan ahead.
- Understand parental leave entitlements
- Build a financial buffer
- Sort your will and life insurance
- Claim all entitlements
Understand parental leave entitlements
Statutory Maternity Pay provides 90% of earnings for six weeks then £187.18 per week for up to 33 further weeks. Statutory Paternity Pay provides one or two weeks at the same flat rate. Many employers offer enhanced terms — check your contract.
Build a financial buffer
Calculate the monthly shortfall during leave and save specifically to cover it. Aim for three to four months of the income reduction before the birth.
Sort your will and life insurance
Having a child is the strongest trigger for reviewing both. Without a will, guardianship defaults to whoever the courts decide. Without adequate life insurance, your family may face serious financial difficulty. Term life insurance for a healthy 30-year-old is relatively inexpensive.
Claim all entitlements
Child Benefit should be claimed immediately after birth. Check entitlement to Universal Credit, free childcare, and Tax-Free Childcare. Many families leave thousands of pounds of entitlements unclaimed.
Bottom line
Financial preparation for parenthood does not need to be complicated, but it does need to happen before the birth. Sort your will, check your insurance, build a buffer, and claim everything you are entitled to.