Managing finances

Financial planning considerations for our first baby

By Mel Abplanalp

Posted 28th Mar 2025

Reading Time: 5 Minutes

As my husband and I prepare for our first child, we’ve encountered numerous financial planning considerations that are completely new to us. With my maternity leave approaching this month, we’ve been reflecting on our journey and taking action with increasing urgency.

For context, I’m naturally a planner – which explains why I already have a detailed plan for my last day at work, all the furniture delivered, and the hospital bag packed (which is actually a small suitcase). I’m trying to control whatever variables I can before our lives change forever with the arrival of our baby boy. I absolutely could not wait for a surprise gender reveal, so we found out early. This extra knowledge has been practical too – we’ve already stocked up on clothes in various shades of blue, green and grey.

While I can’t plan his arrival date, weight, or how I’ll feel, we’re certainly pre-planning to understand the financial impact of this life change.

Is it worth the cost for more space?

We quickly realised how much space a baby needs in our two-bedroom flat. After a two-month property search and mortgage consultations, we concluded that the increased financial burden for more space felt like a step too far right now.

We’ve chosen to stay put for at least six to nine months. The baby’s crib is in our bedroom, my office doubles as storage/nursery, and our living room houses the baby’s wardrobe. This decision keeps our outgoings lower, allows us to save for a larger deposit and maintain a higher emergency fund.

Budgets

Working in financial planning gives me an advantage in budget discussions. My husband and I maintain transparency about our finances and regularly review them together. When he changed careers, we survived on one salary, so we’ve navigated reduced income before.

For those in a similar position, I recommend having an open conversation about your finances in a neutral setting. Consider lifestyle compromises, how long you’ll need to reduce household income, and how you’ll share essential costs.

In our house, we calculate essential bills first, then rank discretionary spending on a scale of 1-5 based on importance. It was definitely a fun experience when we did this a few years ago, where I learnt that a golf membership is a non-negotiable in our house! We agreed to unlimited spending on books and learning, but compromised on holidays, eating out, and clothes shopping (I now only buy new clothes to replace rather than viewing shopping as a sport). We save a set amount at the beginning of each month, never cut pension contributions, and sweep up remaining funds at month-end.

Rather than getting overwhelmed by the often-quoted £250,000 cost of raising a child to 18, we calculated what we can afford to spend on the baby based on our income with Statutory Maternity Pay. We’re prioritising maximising time off with the baby and cutting non-essentials.

Protecting our finances

When considering financial protection, ask: if one or both of us couldn’t work due to illness or death, how would this impact our household? Would a lump sum or monthly payment work best?

Four protection products worth considering:

  • Critical Illness – Pays a lump sum if you can’t work due to illness or injury
  • Whole of Life Insurance – Provides a lump sum to your family upon death
  • Income Protection – Offers monthly payments (typically 70% of gross income) if you can’t work due to illness or injury
  • Family Income Benefit – Provides monthly payments to your family upon death until the end of the policy term

Family Income Benefit is particularly worth considering for non-working parents too. If they pass away, there would be immediate costs for childcare, which currently averages around £300 a week in the UK.

Planning for the worst

As a couple in our thirties without children, we haven’t needed wills, as intestacy rules would suffice – if one of us passed away, the survivor would inherit everything. However, with a child, intestacy rules change:

  • The survivor inherits the first £270,000 and all personal possessions
  • The survivor inherits half of the remaining estate
  • The child inherits the other half

You might wonder why we’re suddenly interested in will planning when the financial side would generally work for us under intestacy rules. It’s actually for a completely non-financial reason – to appoint guardians for our child in the event of both our deaths.

This is a perfect example of holistic life planning, the kind we do at Emery Little. Sometimes we need to make choices that have nothing to do with the figures but are no less important to our families. For some, the motivation behind will planning will be financial, but for others it might be about ensuring the right guardians are in place or protecting specific wishes about how children are raised.

That’s it from me! Please do wish me luck on our next chapter, I think I might need it! Hopefully these considerations can help if you, or a loved one, are facing similar decisions. Please reach out if you need more information about anything mentioned here.