Financial Planning and Budgeting as a New Parent

As a new parent, you're going to have a whole host of new costs to deal with - which is why it's so important to plan financially for the arrival of your child before they're born.

Here are a few tips to help you make the most of your money and ensure your finances are in order before and after the 'new arrival':

Savings

It's obvious that your expenses will increase when you become a new parent - but that doesn't mean you can't stay in control of your finances.

By making small contributions to a savings account before your child is born, you can build up a financial 'cushion' for when they arrive, which can seriously reduce the strain all those new costs can have on your budget.

For example, if you contribute £100 per month to a savings account for the last eight months of your pregnancy, you will be left with a full £800 by the time your child is born and that's without interest added on!

This money could go a long way when it comes to buying supplies (food, clothes, nappies, etc.).

Note: if you can afford to keep on paying money into your savings account after your baby has been born, you should do this - as you never know when an unexpected cost might pop up!

Creating a budget

When your baby arrives, the chances are any financial plans you've made are going to go a little 'haywire'. That's why it's important to create a strong budget before your child is born.

Creating a budget is a fairly simple task - just follow these steps:

Note: before you create your budget, it might be useful to do a bit of research about budgeting as a new parent. You could visit this site, for example, where there's a useful resource of budgeting tips for all the family.

• Step one - your income
  The very first thing you should do is note down your monthly income. This includes your salary and any benefits/grants you receive.

• Step two - your outgoings
  Now you need to write down your monthly outgoings. However, at this stage, you only need to include your essential costs - your mortgage/rent payments, for example, your utility bills and your everyday living costs. Don't include the cost of repaying your unsecured debts.

• Step three - your disposable income
  Finally, now you've got your total income and your total expenditure, you need to work out your 'disposable income'. To do this, simply subtract the money you spend from the money you earn.

Your disposable income is the money you'll use to service any unsecured debts you've got - credit cards, unsecured loans, etc. All the money that's left after doing this can be used for savings and non-essential purchases.

Budgeting as a new parent

So, now you've got yourself a strong (if basic) budget, it's time to put it to the test. You should find that keeping track of your money helps you stay in much better control of your finances now and in the future.

Remember, though, when you become a new parent, your budget will obviously change - which means you'll have to follow the steps we went through above again; this time including your essential 'baby' costs (food, clothing, etc.).