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A new baby is expensive, even if it is a joyous occasion. Babies need a lot of things – from nursery furniture and pushchairs to nappies, milk and clothes. Throw into the ring the fact that you will probably go on maternity leave and so take a huge pay cut, and well, your finances are going to take a hit. Your entire budgeting strategy will be turned on its head when you welcome a new child into the family, so the faster you start making changes, the better for your bank account.
So, how do you ensure that you can afford a new child without taking out loans and credit, and to still manage to pay off existing debts and loans? Finance Solutions can help you on the latter, but here, we look at how you can budget for all the essentials without getting into a sticky financial mess.
1. Write a list of the essential expenses
Don’t wait until baby is born to start thinking about the things that you need. The earlier on in your pregnancy you can do this the better – it gives you more time to save up and make plans. The first thing you need to do is write a list of all the purchases you need to make – this includes the larger, one-off purchases such as pushchairs and furniture for the new baby’s nursery, as well as everyday smaller items such as clothes and nappies. Having these lists of short and long term expenses will help you to work out how you will pay for them and what you need to build into your budget going forward.
2. Adjust your spending habits
Now you have a better idea of what you need to buy for your baby each month, you can start setting out your monthly budget. You may find that you need to cut down on your spending in other areas in order to stick to your budget. That may mean cooking and eating at home more if you have a restaurant or takeaway habit, or taking lunch to work instead of buying it. Having a baby usually means significant changes to your lifestyle, financially and otherwise.
3. Find out what help you are entitled to
Depending on your financial circumstances and where you live, you may be entitled to some sort of benefits. For example, in the UK, if both parents earn less than £50,000 a year, they are entitled to child benefit. You may also be entitled to universal credit or tax credits, as well as help towards childcare costs. Knowing what you are entitled to and making sure you receive them can really help towards budgeting for a new baby. Contact your local Citizens Advice Bureau to find out more about what you may be entitled to.
New babies are expensive, there is no doubt about that. However, with some forward planning, careful planning and making sure you take advantage of any benefits that you are entitled to will go a long way towards giving you a helping hand.