If you are having a child, big changes are on the way, not least to your personal finances. Taking some time now to sort out your finances and make plans for the future will really pay off later.
Your child will have different needs at certain stages of their life, so early planning and research are important to help you cope with expenses, such as:
- Medical costs when you are pregnant
- Once-off costs for baby equipment such as cot, car seat etc.
- Increased household spending on baby food, nappies, clothes etc.
- Ongoing large costs, such as childcare
- Future costs, for example your child’s education
- Emergency fund – you should try to set aside at least three months’ salary
Planning for baby's arrival
Having a baby is a very happy time but it also brings new pressures on your finances. So it is important that you plan ahead. The best time to start this is before your baby is born.
Start with a money makeover to help you get ready for your baby’s arrival – use our four-step plan to help you.
Use our baby budget planner to plan your spending. Make sure you include your additional income from child benefit and consider any other benefits you may have in the next 12 months. If you are working, you should check your contract with your employer to find out exactly what pay you will receive when you are on maternity leave and the impact, if any, that maternity leave may have on your other employee benefits. Make sure to also factor in unpaid maternity leave if you are considering this.
Money saving tips
To help stick to your new budget, check out our money saving tips. Don’t forget to look at your list of baby-related expenses to see if there are areas where you could cut back on spending. For example, think about borrowing or using pre-owned items and consider asking friends and family to buy gifts from your list of baby essentials.
Work out how having children will affect your pension
Having children is likely to affect your income and also your pension. If you change your working arrangements, for example, take extended maternity leave, a career break or move to part-time working, this could impact on your benefits.
We have more money saving tips and lots of information on how having children will affect your pension in Stage 1 of our Baby Steps booklet.
When you have children
As your family grows, it’s a good time to complete a new financial health check and work out a family budget. Make sure to keep your family budget up-to-date as your children grow and their needs change.
Meeting day-to-day expenses
There are many predictable expenses that come with having young children, such as childcare or school expenses, which you can work into your budget. All these expenses should be included in your budget. For back-to-school costs, use our back to school budget planner to help you. Try to stagger your spend on annual and occasional expenses. You should avoid using your credit card or other types of credit to meet day-to-day expenses unless you know when you will be able to pay it off.
Check out your entitlements
You may be entitled to benefits that you are not claiming, such as the Early Childhood Care and Education Scheme (ECCE). This provides your child with one year of free pre-school care and education for a set number of hours and weeks. For information on the rules and how to apply, see www.citizensinformation.ie. You may also be entitled to Family Income Supplement (FIS), which is a weekly tax-free payment to employees on low pay with at least one child. For more information on FIS and other potential benefits, read more at www.citizensinformation.ie.
Preparing for unexpected emergencies
When you have a family, it’s more important than ever for you to build up an emergency fund to cope with unexpected expenses, such as doctor’s bills or significant household expenses. If you can, try to start saving even small amounts now every week or month.
Saving and investment goals
You will have different money goals at various periods in your life. When you have children your goal may be to save for holidays, a larger home or for your children’s future. Once you decide on your savings goals, work out how much money you will need and then use your budget plan to work out how long it will take you to build up the amount of money you need. Think about starting a regular savings plan. Then take a look at our financial product comparisons to see what is available in the market and to help you decide what will work best for you.
Borrowing money and using credit wisely
Having a family can be a strain on your finances, so it’s not hard to imagine why some families need to borrow. But there are some things you need to consider before you decide to borrow. If you cannot meet your family’s day-to-day expenses without using a loan or credit card, you could run into serious debt problems. If you need help, see our information on tackling debt.
Our Baby Steps booklet – stage 2 includes detailed information to help you deal with debt. There’s also information for you if you are a one-parent family, or are dealing with separation or divorce, as well as family illness or bereavement.
Your children's future
Teaching your child about money
As a parent, planning for your children’s future is very important, and part of this is teaching your child the value of money. Make it relevant to them in practical ways by, for example, showing them how to save for a bike or game. Another fun way to get your kids thinking about money is to get them to open a bank account or an account with a local credit union or post office. Encourage them to earn money and save regularly.
As children get older, show them how you make some of your household financial decisions and how important it is to budget. This will help your children to develop good spending habits in the future. Our Baby Steps booklet – stage 3 has lots of information on how to pass on good money management skills to your children.
Saving and investing for your child’s future
You want your child to get the very best start in life. If you start planning ahead now for big future expenses, like the cost of going to college, this can help to ease the financial pressures later on. Your child’s education is perhaps the largest expense you have to plan for, so you need to explore your savings and investment options.
You could open a regular savings account with a competitive rate and put money aside each month. Or you could consider an investment product. But before you make a decision, you need to think about what access you would like to your money and what level of risk you are prepared to accept.
Protecting your family
When you are a parent, you need to provide for your family today, but you also need to protect them into the future. None of us want to think the worst could happen to us, but you need to make sure you have enough life insurance in place to protect your dependents if they rely on your salary, the work you do in the home or in a family business. You should also think about whether you need other types of insurance, such as income protection insurance or serious illness insurance.
Make sure you get the best out of your policy by shopping around for quotes.
Pensions and retirement planning
Retirement may seem far away now, but taking the time to think about retirement is very important, especially now that you have a family. It is important to know that if you decide take extended maternity leave or change your working arrangements, your retirement fund is going to be affected.
Wills and estate planning
Writing a will doesn’t need to be difficult. If you don’t already have a will, you could arrange to speak to your solicitor for more information. If you are a union member, you may have access to a free wills service. Free Legal Advice Centres (FLAC) have produced a number of useful information leaflets, including information on wills.
You can find out more information about planning for the future, protecting your dependents and teaching your kids about money in our Baby Steps booklet – stage 3.