Bringing a new life into the world is an expensive business. This year, insurer LV= said that just the first year of a baby's life will cost its parents an average of £8,500. So if you're planning to start a family, or have a child on the way, these 10 tips will help you get your finances in order.
1. Find out how much maternity/paternity pay you will get
So long as you have been working at your company for 26 weeks and earn more than £95 a week you will be entitled to statutory maternity or paternity pay (SMP). Basic SMP is paid at 90% of your average gross weekly earnings for six weeks, followed by 33 weeks at the lower limit of £123 a week or 90% of your weekly pay. All the details of this are on the Directgov website.
Your employer might have its own contractual (or "company") scheme so you should contact your human resources department to find out what's on offer. If you are keeping your cards close to your chest for the time being, dig out your contract. Bear in mind that some company schemes require you to pay back some of the money if you opt not to come back to work.
2. Start saving
According to experts at the Institute of Financial Planning, parents should aim to have at least three months' income put aside for emergencies before their baby arrives. "Remember, you will have between seven and eight months of knowing you are pregnant to try to get this money together," spokeswoman Sue Whitbread says. "However, the habit of saving is more important than the amount saved. Even if you start at £10 a month, you can always raise it."
3. Budget to live on one salary
A sudden drop in income is one of the starkest financial implications of having a baby, so prepare in advance. Carrie Silversword, a 32-year-old assistant manager of Goals gym in Beckenham had her first child, Lucas, in March this year.
"My employer paid the statutory maternity pay of 90% of my salary for six weeks followed by £123 a week for the remaining 33 weeks," she says. "This drop would have been shock if my partner Auri and I had not budgeted in advance for the mortgage to be paid just from his salary."
If you are really brave, try living on just one salary before the baby arrives – that will allow you to get used to it and enable you to build up some savings.
4. Get your life insured
When you live a single life with no dependants, or even as one half of a professional working couple, life insurance can feature near the bottom of your financial priorities. However, having your first baby should act as a trigger to get cover in place, Matt Morris from broker LifeSearch says.
"A sensible option is to take out a life insurance policy that pays out an annual tax-free income rather than a lump sum. This is known as family income benefit. It means the money will be paid out over years rather than in one go, which could be quickly squandered."
Aviva is currently offering new parents free life insurance up to £10,000. Cover continues up until the baby's first birthday and parents will need to register before their baby is six months old. However, the insurer says the cover is "only a fraction" of what is ideally needed.
5. Make a will
Paul Sharpe, chairman of the Institute of Professional Willwriters (IPW), says: "There is still a feeling that a will is something you make when you get old, but this couldn't be further from the truth. A will is something designed to protect what is valuable, and you don't get much more valuable than a baby."
It's a good idea to appoint a solicitor or a professional will writer who is a member of the IPW to draw up a will on your behalf. For a couple this should cost in the region of £150, Sharpe says. "DIY will kits are available for a lot less, though you do run the risk that it won't do what it set out to."
6. Sell your junk to make space and money
You will need both when the baby arrives, so there is no better time to clear your clutter. Mother of two Karen Lowe, 31, used eBay to offload unwanted gear before having her second child, Amelie, last year. "I sold clothes I didn't wear, didn't like or didn't fit, and got rid of CDs and DVDs. Having one baby isn't cheap but having two is even more of a financial strain, so as a stay-at-home mum I wanted to do everything I could." Lowe's clear out raised a welcome £200.
7. Don't go gaga over baby equipment
Having your first baby is a once in a lifetime experience, and because of this retailers go straight for the financial jugular. But while it's important to equip yourself with the essentials like a new car seat that meets safety standards, other items such as nappy bins and night lights can be avoided.
"Buy the must-haves but hold off on the nice-to-haves," Catherine Hanly, editor of parenting website Raisingkids, advises. "Most first-time parents find they have bought at least one piece of equipment that has never even been touched."
8. Apply for the Health in pregnancy grant
If you are at least 25 weeks pregnant don't forget to claim your one-off, tax-free payment of £190 from the government. The so-called Health in Pregnancy Grant was introduced in April to help mums-to-be keep healthy for their birth.
You need to get a signed claim form from your midwife or doctor and send it to HM Revenue & Customs. The money will be paid directly into your bank account.
9. Apply for child benefit
When your baby has arrived you should make time to apply for child benefit. The government will only backdate child benefit payments by three months, so it is best to get your form in as soon as possible. It is £20 a week for your first baby and £13.20 a week for other children. Forms are included in the "Bounty packs" given to new mothers, or you can download one from the Directgov website.
10. Open a child trust fund
Once you have claimed child benefit you will be sent a £250 voucher by the government to invest in a child trust fund (CTF) – a savings account which remains tax-free until your child turns 18. You will be sent a further £250 when your child turns seven.
Yorkshire building society has worked out that paying in just £2.70 a day to its cash CTF (which offers 3% interest in the first year and 2.3% thereafter), in addition to the two government vouchers, will result in a balance of £22,548 after 18 years, which is forecast to be the average university debt for graduates 21 years from now.
