Having children
How can you prepare financially when starting a family?
Having a child brings many changes, including new financial responsibilities. Planning ahead can help you prepare for future costs and reduce pressure as your family grows. From budgeting for everyday expenses and childcare to understanding benefits, pensions and savings options, a little preparation now can make a big difference later on.
This page explains how to plan financially before and after your child is born, with practical guidance on managing changing costs, building an emergency fund, protecting your family and planning for your child’s future. Taking time to think ahead can help you feel more confident about supporting your family at every stage.
Plan ahead for your child’s changing needs and future costs
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
- Once-off costs for baby equipment such as a 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, if possible, to help reduce the burden of unexpected expenses
Planning your baby’s arrival
How can you prepare financially before your baby is born?
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 Financial health check to get ready for your baby’s arrival. Create a "baby budget" to:
- Plan your spending – many retailers will allow you to pay off baby items such as prams, cots etc. in instalments
- Consider additional income from child benefit and any other benefits you may have in the next 12 months
- Check your maternity or paternity leave entitlements and how taking leave may affect your employee benefits (e.g., pension contributions, health insurance, bonuses)
- Factor in unpaid maternity leave if relevant
How can you cut costs when starting a family?
- Borrow or use pre-owned baby items
- Consider asking friends and family to buy gifts from your list of baby essentials
- Review your baby-related expenses and cut back where possible
Work out how having children will affect your pension
Having children is likely to affect your income and, as a result, your pension. If you change your work arrangement, for example take a career break, move to part-time employment, job share, or take extended maternity or adoptive leave, these could impact on your benefits.
Seek independent financial advice regarding pension contributions, and go to MyWelfare to request a contribution statement that shows a summary of your social insurance record in Ireland. It includes:
- The number of contributions you have up to the end of the last tax year
- Any credits you’ve received. Your online record is not a forecast of your State pension
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.
Further information
For more information on how having children can affect your pension options, or to get an idea of how much more you will need to save to meet your expectations in retirement, check out the information and pensions calculator Pensionsauthority.ie. You could also speak to your employer, trade union, pension provider or a financial adviser. Finally, the National Pension Helpline offers expert guidance and support to help you understand your pension options and make informed decisions.
If you change your working arrangements
Employer pension plan
Ask your employer what effect, if any, your new working arrangement will have on your retirement benefits. If you envisage a shortfall, for example due to taking a career break or working part time, you should consider topping up your benefits with additional voluntary contributions (AVCs) or with notional service purchase (NSP), if you are in a public service pension.
Personal pension plan
Some personal pension plans allow you to stop paying contributions for a time or to increase or reduce your contributions, although this may be subject to a minimum level of contribution and a charge.
Personal Retirement Savings Account (PRSA)
With a PRSA you are free to stop, start, increase and decrease your contributions at any time, although your provider may require prior notice of a change. However, if you don’t pay into a PRSA for two years or more, and the balance is less than €650, then the PRSA provider can cancel your PRSA and refund the balance to you, less tax. The provider has to give you three months notice before doing this.
With all private pensions (Personal pension plans or PRSAs), the benefits you receive depend mainly on how much is contributed, so if you stop or reduce your contributions, you will end up with smaller benefits when you retire. Depending on your circumstances, you could top up your benefits with additional voluntary contributions (AVCs).
When you have children
How do you plan financially as your family grows?
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.
How do you handle day-to-day expenses?
- Include predictable costs like childcare and school expenses in your budget
- Try to stagger your spend on annual and occasional expenses
- Avoid using credit for daily expenses unless you know when you can repay
- Allow some wriggle room in your budget (i.e. an extra 10% for unplanned costs)
What benefits are you entitled to?
National Childcare Scheme (NCS): this scheme provides financial support to help families with their early learning and childcare costs for children aged between 24 weeks and 15 years of age. For more information and how to apply, visit the National Childcare Scheme website
Early Childhood Care and Education Scheme (ECCE): this scheme provides your child with 2 years of free pre-school care and education for a set number of hours and weeks. For details on the rules and how to apply, visit Early Childhood Ireland or Citizens Information.
Working Family Payment (WFP): previously called Family Income Supplement (FIS), WFP is a weekly tax-free payment for employees with children and an income below a certain level. For more information on FIS and other potential benefits, go to Citizens Information.
How do you prepare for emergencies?
Having an emergency fund will help reduce the burden unexpected expenses have on your finances. An emergency fund will also reduce your need to borrow for unexpected expenses.
If you can, you should aim to set aside an amount each time you are paid to build up your emergency fund. You could also consider using the child benefit payment, if possible, to supplement your emergency fund.
What are your savings and investment goals when you have children?
Your goals may include:
- Holidays
- A larger home
- Your children’s future
What should you know about borrowing and credit?
If you’re struggling to meet daily expenses, borrowing may seem necessary – but it can lead to serious debt. Read our advice before you decide to borrow and visit our section on tackling debt.
Refer to the Baby Steps booklet – stage 2 for more help, including advice for one-parent families and information on separation, illness or bereavement.
Your children’s future
How can you teach your child about money?
As a parent, planning for your children’s future is very important, and part of this is teaching your child how to manage money. Make it relevant and age appropriate. Some ways to teach children about money:
- Get them to open a bank account, credit union account or post office account. This will teach them how to engage with financial institutions and understand the steps involved in the application process
- Encourage earning – doing chores to earn money will encourage responsibility and give children a sense that they have worked for their money.
- Encourage regular saving – help motivate your child to save for something they want. This will teach them the value of money and build healthy financial habits from an early age
Refer to our Baby Steps booklet – stage 3 for lots of information on how to pass on good money management skills to your children.
How do you save and invest for your child’s future?
You want your child to have the best possible start in life. By planning ahead now for major future costs, such as college fees, you can ease financial pressure down the line. Education is likely to be one of the biggest expenses you'll face, so it's important to explore your savings and investment options early. Options include:
- A regular savings account with a competitive rate and put money aside each month
- An investment product
Before choosing, consider:
- How much access you need to your money?
- What level of risk you’re comfortable with?
What insurance do you need to safeguard your family?
As a parent, you need to provide for your family today while also protecting their 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 may also need other types of insurance, such as:
Get the best deal for your circumstances by shopping around for quotes.
Wills and estate planning
Writing a will doesn’t need to be difficult. There are various ways you can get information:
- Arrange to speak to your solicitor for more information if you don’t already have a will
- Union members may have access to free wills services
- Free Legal Advice Centres (FLAC) offer helpful leaflets
