Planning Financially for Parenthood

Becoming a parent is a milestone that changes everything. Alongside the joy and excitement comes a shift in financial priorities—especially as the costs of raising children continue to increase. In the UK, raising a child to age 18 now costs a single parent or guardian an average of £220,000¹, setting a record high. With this in mind, financial planning for parenthood is more essential than ever, helping you balance immediate costs with longer-term security for your family.

In this latest article from our series on life stages, we bring you some steps to consider as you adjust your financial plan to fit your growing family’s needs.

1. Adjust Your Budget for New Family Expenses

Children bring a new set of regular expenses that can impact your monthly budget. From nappies and baby gear to clothing and school supplies, the costs of childcare add up quickly. As children grow, family expenses naturally change, often including:

• Childcare Costs: Whether through nursery fees, after-school clubs, or babysitters, childcare can be a significant part of the family budget, particularly if both parents work. You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare.²  However, this is subject to your tax position, so planning ahead is important.
• Everyday Living Costs: You may notice higher grocery, utility, and transport costs as your family grows.
• Extracurricular Activities and Outings:  From swimming lessons to weekend trips, creating memorable experiences for children comes with a price tag.

To manage these costs, many parents find it useful to update their budgets to better track spending and identify areas where they can save. Some use budgeting apps or family finance trackers to stay organised and ensure both immediate and future goals stay in focus.

2. Build a Safety Net with Emergency Savings

With new responsibilities come new uncertainties. Establishing an emergency fund – as a rule of thumb covering three to six months of essential expenses - can bring peace of mind. This fund acts as a financial cushion, helping cover your mortgage repayments and unexpected costs like car repairs, medical expenses, or job transitions without disrupting your family’s financial stability.

If you haven’t already started, aim to contribute a manageable amount each month. Even small, regular contributions can build into a helpful safety net over time.

3. Invest in Your Family’s Future

Balancing current spending with future goals is vital, especially when it comes to education and long-term security. Here are a few ways to save for the future while navigating the costs of today:

• Junior ISAs and Child Trust Funds: These tax-efficient savings options allow you to set aside funds for your child, growing tax-free until they reach 18.
• Education Savings Plans: With university costs rising, creating a dedicated education fund can help ease the financial burden when the time comes.
• Pension Contributions: While saving for your child’s future is important, so is maintaining your own retirement security. Balancing contributions to your pension alongside savings for your child ensures that your financial needs are covered for the long term.

4. Review Insurance Policies for Financial Security

With family in mind, now is a good time to review your life insurance and critical illness policies to make sure they cover your changing needs. Life insurance can provide a vital safety net, offering financial support to your family if you’re no longer there to provide it.

Income protection insurance can also be valuable, offering monthly income if illness or injury prevents you from working. Speaking with a financial adviser can help clarify the right policies for your situation, helping you create a strong foundation for your family’s financial security.

This recent article: Why do I need Financial Protection? explains further.

5. Plan Regularly to Stay on Track

Your financial goals will likely change as your family grows and as you move through different life stages. Revisiting your financial plan regularly—especially after significant changes like having a child—can ensure that your plan adapts to new needs and goals. Whether you review your finances annually or every few months, a regular check-in helps you stay on top of budgeting, saving, and preparing for future expenses.

Finding Balance

Welcoming a child involves a careful balance of managing today’s costs while planning for tomorrow’s goals. A solid financial foundation can help give your family the security they need to thrive, while helping you navigate the many joys and changes that parenthood brings.

If you’d like support in creating a tailored plan for your family, reach out to a member of the team at Stringer Mann Chartered Financial Planners. With a thoughtful approach, you can focus on enjoying your family today while setting a foundation for a secure and rewarding future.

Next month’s article will consider the next life stage which may involve dealing with a serious illness or disability. In the meantime, if you would like to get in touch, please telephone: 01442 874888 or email.

Further Reading

Additional articles in this series include:

• How much money do I need to see a Financial Adviser?
• Starting Work: Kickstart Your Financial Future
• Taking a Joint Approach to Finances
• Navigating the Home-Buying Journey

Your home may be repossessed if you do not keep up repayments on your mortgage.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The value of an ISA will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

¹The Cost of a Child, Child Poverty Action Group, December 2023

²Tax-Free Childcare https://www.gov.uk/tax-free-childcare November 2024

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