How to plan your finances properly when a baby is on the way
This article is for parents or those planning to become parents. With a new baby on the way, you might be feeling excited and relieved — but don’t let it lull you into a false sense of security. Before the baby arrives, it is essential to ensure your finances are in order and you’ve adequately planned for all that’s to come. As the end of pregnancy approaches, your body is likely still developing as well as your little bundle of joy (and there are lots of other things like getting the nursery together and painting the wall. There’s so much going on, and you could very well forget about planning your finances. If you are looking into loans to help you through, web loans express has many loan options which can assist along the way.
Figure out what your monthly childcare costs will be
Childcare costs have soared in recent years, and that trend is expected to continue – especially with new parents often paying significantly more for childcare than they anticipated. So, exactly how much will childcare costs set you back in your first year of parenthood?
If you’ve recently had a baby, then you’re probably wondering what childcare costs will be like – and, if you’re planning a family, how you might afford them.
But it’s a common misconception that the cost of childcare is prohibitively high. In fact, many parents choose not to work after having a child, meaning they can afford childcare costs.
But what will childcare costs be for mothers and fathers in the UK in 2019? The Childcare Choices website has put together some figures to indicate how much you will be charged for childcare in your first year of parenthood. The Childcare Calculator estimates that if you work full-time – typically 37.5 hours every week – and childcare costs £2,500 per month, then you’ll need to earn a salary of around £35,000 a year to afford childcare costs.
Create a low-risk, high-reward savings account
Savings accounts in the UK come in all shapes and sizes, and they offer different interest rates. Finding the account that’s right for you depends on what you want from your savings and how much risk you’re willing to take. Here are the main features to consider:
Interest rates
A savings account pays interest either on the total amount in your account or on a specific percentage (for example, 1%) of the amount saved.
Minimum balance required
Most savings accounts require a certain minimum balance to earn interest — typically £1,000 or £500.
Early withdrawal penalties
Some savings accounts charge a penalty if you withdraw money early. Usually, this isn’t much, but it’s worth considering, especially if you have a limited amount of money in savings and you need to use it in an emergency.
Regular or irregular access
Some accounts let you withdraw money every month, some only once a year, and some have no withdrawal limits.
Identify ways you can cut back expenses
This one may seem obvious, but keeping a budget can help you identify ways you can cut back expenses with a baby on the way. Here are some tips for getting started with budgets here.
- Track your spending: The best place to start is by tracking your spending. Use a budgeting tool like Mint or Personal Capital to track your spending or a notebook and pen.
- Look for unexpected expenses: By tracking your spending, you may identify areas where you can cut back to save money.
- Look for opportunities to save: Look for areas of spending where you can save money.
- Get in the habit of saving. The earlier you develop the habit of saving money, the easier it will become.
- Be realistic with your savings goals. Setting unrealistic goals, such as saving every penny you earn, often sets you up for failure (and often discouragement). Instead, focus on saving as much as you can and build your saving habit from there.
- Be diligent about paying off debts. Once you’ve identified where you can cut back, focus on paying off debts, which will help you build a solid credit history.
- Don’t spend more than you earn. If you’ve set a goal to save, but you’re still overspending, that may be a sign that you need to increase income or reduce unnecessary spending.
- Be creative. Explore different ideas to maximize your saving potential.
- Cut back on expenses. If you can cut back your spending, you’ll have more money to save.
- Beware of “lifestyle inflation.” Be careful of “lifestyle inflation,” the practice of spending more when you make more money.
- Make a plan. The most successful people plan. A budget is an essential tool in planning.