Putting your finances in
order
Preparing for a new baby can be the perfect time to reflect on your finances in general. You may need more living space, or you may want to look at whether you can put any money by before the baby arrives. Here you'll find a brief outline of the topics you might need to think about in relation to this.
Rent/Mortgage
When you've got a little one on the way you need to have a think about your living space. Not just how many bedrooms you have but how you'll use them; where this new person's going to live and where are you going to put all their things? (it's amazing how much stuff such a small person needs).
It maybe that such a big life change will require you to move house. If so you are likely to be better off doing so before the baby arrives. You'll be busier afterwards and of course will have one more person and lots more stuff to move.
If you decide to move house and need to change your mortgage, it is important to remember that most mortgage providers will provide loans based on your individual financial circumstances and what you can afford. Make sure that if your income does decrease while on maternity leave, you will still be able to pay your rent or mortgage on this lower income.
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Maggie's story*
"When I fell pregnant, we were renting a small, one-bedroom flat. We really wanted to find a family home and we didn't want to have to end up moving in the first few months after the baby was born. So that's when we decided to use our savings and put down a deposit to get a mortgage for our own place.
We found a cheaper area where we could afford a two-bedroom house and were lucky to find a lovely home quite quickly. The sale went through within three months and I was only 6 months pregnant by the time we moved. Although it was a bit of an upheaval, it was definitely worth doing it and I love the fact we now have a place to call our family home".
*Fictional example |
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Savings
It's a good idea to try and save as much money as possible during your pregnancy. If you work, you'll still be earning during this period, and you may find that you aren't going out as much meaning you will have some extra money. Whatever you can put aside will help, even if it's just enough to pay for a few essential baby items in the first couple of months.
Remember when you're on maternity leave, you may find yourself spending less on:
- Transport - e.g to and from work
- Lunches and snacks at work
- Makeup and clothes
- Nights out with colleagues or friends
Borrowing money
You may decide you want to borrow money to help you with the costs of the new arrival. However, if you can manage without getting into debt, it's generally better. If you do decide to borrow please just make sure you use a reputable provider – most of the high-street banks will be happy to help. Also, check the rate of interest (APR) and avoid borrowing on credit and store cards, it's easy to borrow money this way, but these kinds of cards usually charge much higher interest rates.
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Julie & Mark's Story*
"When we found out we were pregnant we were really excited. A bit over excited as it turns out, we went off and bought tons of new things, redecorated the nursery and generally spent too much money on things that we didn't really need to. We got stuck with credit card bills that we just hadn't budgeted for paying back. In the end Mark's parent's helped us out but it was embarrassing and we know we were lucky we had them to help in the end."
*Fictional example |
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You need to make sure you budget properly, it's ok to borrow money to cover equipment or house moving expenses if you are sure you can afford the repayments. It's a different thing if you're borrowing to fund your on-going living expenses though. You risk getting into a cycle that you can't break. Use our budget calculator to work out what you think you need and what you think you can afford.