Becoming parents is an exciting and nerve-wracking step for any couple. It shakes up your routine, sets new priorities and can be physically and mentally draining. It is important to consider the financials when starting a family. You will have new budgeting priorities, will need to work out how to juggle work and home and will need to look ahead to secure your new-born’s future. This article will take a look at some of the considerations that will be important to consider when expecting, offering some basic guidance to help facilitate your transition into life as a parent.

Parental Leave

Maternity leave is a period of time you can take off work to be able to focus on childcare for the first year of your baby’s life. You retain your job, your pay and legal employment rights. There are several important points to note in regard to maternity leave:

  • You are entitled to a year (52 weeks) of maternity leave when having your baby, starting either at the 11th week before due date, or the day after the birth if your baby comes early.
  • You are entitled to 52 weeks off, of which 39 (if you are eligible) are paid by your employer. To qualify, for Statutory Maternity Pay (SMP), you need to have been earning at least £123 a week and have worked for your employer for at least 26 weeks by the 15th week before your due date.
  • SMP is 90% of your average weekly earnings for the first 6 weeks and then either 90% or £172.48 for the subsequent 33 weeks, whichever is lower.
  • You retain all of your employee rights, for instance paid holiday and protection from unfair dismissal.
  • If you are self-employed, you won’t qualify for SMP, but may be eligible for Maternity Allowance.

Paternity leave is also available, and can be applicable to a number of people, including the biological father, the adopter, or the child’s mother’s partner. It allows for the father/partner to have up to two weeks off, paid, in order to spend time with the new-born. In terms of information, the following is important to note:

  • To qualify for Statutory Paternity Pay, you must have been working for at least 26 weeks before the 15th week before the due date, and have been earning at least £123 per week.
  • You are entitled to 1-2 weeks off, which must be taken in one block.
  • The pay rate is the lowest of either £172.48 or 90% of your average weekly earnings.

Another possible option is shared parental leave. This affords you with up to 50 weeks of leave and 37 weeks of weeks of pay, which you and your partner can share between you. There is a specific set of eligibility criteria, which can be found here, and may be slightly different for birth and adoptive/surrogate parents. You will also have to give up some of your maternity leave. For example, if you were to only take 20 weeks of maternity leave, you can then share the remaining 32 weeks with your partner.

Some sort of parental leave is the standard path for any parent or couple. As such, it is important to discuss how you will best organise the first year of your child’s life.

Costs of childcare

Having a child, while exciting, is, to put it bluntly, a financial burden. According to the Independent, the average cost of a full-time nursery place for a child under two is now an unbelievable £15,000 annually. You will need to make sure you have some savings and be able to actively budget, or find other arrangements to make sure you can fulfil childcare obligations, for instance having close friends or family who are free and willing to pitch in. For many childcare isn’t negotiable, especially those who are reliant on full-time jobs to get by or are scared they will be sacrificing their careers. To get an idea of the average UK costs here are a few examples:

  • Registered childminder – Full Time (50hrs): £237.28 p.w., Part Time (25hrs): £124.41 p.w.
  • Nanny – Full Time: £350-650 p.w., Part Time: £250-450 p.w., as well as tax and National Insurance contributions.
  • Day Nursery – Full Time: £269.86 p.w., Part Time: £138.70 p.w.

Childcare in this country is unfortunately expensive, and for many families the only option. Making sure you are able to handle the costs is the key to ensuring your stability and making your family prosper.

Life Insurance

One idea that may be worth considering is getting life insurance. This can be considered at any stage prior to starting a family, however, will be useful to provide financial security for your partner and/or your children, in the unfortunate event that something may happen to you or your partner. This is since, in this event, the surviving partner will need to find new solutions for childcare, whether scaling back working hours or paying for full time childcare. As such, having an insurance policy is useful, to afford you with some basic income to ensure your stability in the worst-case scenario. In order to find the best plan for you, it is advised to speak here with a financial advisor.

Conclusion

Thus, starting a family is a huge and hectic moment in any person’s life. It changes your routines, brings about new challenges, yet also allows for beautiful and heart-warming moments. Nevertheless, getting your finances in order is fundamental to alleviate any possible anxiety, giving you a smooth transition into parenthood.

Talk to one of our expert financial advisors today.

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