June 27, 2024

Preparing Your Savings for a Baby: How Much Does it Cost?

How much should you save up for a baby?


It is an incredibly exciting milestone to be planning for a baby in the family, and of course a decision that isn't taken lightly. Aside from the psychological considerations it will have, there are also the financial implications. These aren't limited to the one off expenses that you'll plan for early, like the pram and clothing, it also extends to repeat expenses like nursery and childcare.

It is therefore vitally important that you plan these ahead in as much detail as possible, to work out how they will affect your long term financial plan. In order to help you do so, we've put together a quick guide that will help you figure out what to spend money on and how much it might cost.

Don't forget, this is all information that can be used for your Strabo Life Events on the Net Worth Forecast, allowing you to map the financial impact of different financial outcomes on your long term retirement plan.

Understanding the True Cost of Having a Baby

We've tried below to be as detailed as possible when listing down all the expenses you might encounter. You can do your own research on these and decide, in some cases, how much you would like to spend on each and what sort of products you're looking for. When preparing your savings for a baby, you'll have to work out things like whether a premium pram is what you want, or you're happy to make some concessions in certain areas. Often, two products might be very similar in all but aesthetics, so it can be a case of choosing between form and function.

As with a wedding, much of this comes down to personal preference - we've just put together a quick guide to get you started.

Creating a Baby Budget: What to Include

We've listed below essential baby expenses, non-essential expenses, ad hoca and recurring expenses and a few other items that we think you might have missed in your forecast. If you've remembered all of these without our help, we'd be seriously impressed!

Essential Baby Expenses: A Comprehensive Breakdown

Here are the essential items you'll have to cost up. First up, nursery costs:

  1. Cot or cot-bed (includng mattress)
  2. Bedding, blankets & sleeping bags
  3. Car seat (your baby is legally required to travel in a car seat. You should not buy one second-hand unless you are certain it hasn't been in an accident)
  4. Pram, pushchair or travel system
  5. Sterilising equipment eg pan / microwave
  6. Essential clothing
  7. Disposable or reusable nappies
  8. Bottles (including heads & cleaning tools)

Non-Essential Baby Costs: What You Need to Prepare For

Don't also forget all the little "nice-to-have" things. Many of these can be included in the baby's bedroom:

  1. Changing table
  2. Baby monitor
  3. Room thermometer
  4. Mobile
  5. Nightlight

Some also come under Travel & Playtime

  1. Travel cot
  2. Baby sling or carrier
  3. Changing bag
  4. Playmat or activity gym
  5. Baby bouncer or rocker
  6. Rattles, teether and other toys

Finally, there's also Feeding items:

  1. Breast pump
  2. Maternity bra / breast pads
  3. Cloths & bibs
  4. Nursing pillow
  5. Dummies
  6. High chair
  7. Weaning equipment

Ongoing Baby Expenses: Monthly Costs to Expect

Often people forget about clothing, bathing and changing - recurring things that need to be taken care of. While these can seem quite insignificant, they add up quickly and oftenrecur.

  1. Baby bath
  2. Baby towel
  3. Bath thermometer
  4. Grooming essentials

Hidden Costs of Having a Baby: What You Might Miss

Saving Strategies for Expecting Parents

Now you've got a pretty comprehensive list of things you will likely need to buy, it's time to work out whether you can afford them, what might be left over and what you will have to start saving up for. First, look at the money you have in the bank, and the money you have invested as a couple (liquid and illiquid, and available to use on a baby). Then, you can look at your monthly take home pay and how much you might be able to save before the baby arrives.

Cutting Costs: How to Save Money on Baby Expenses

To be honest this is a decision you'll have to make as a couple. Many of the items above are either non-essential, or you can buy slightly cheaper versions of them to save money. Some things you might be able to ask for as gifts from your family, particularly if you are not yet married or have some unused gift allowances from a past wedding. There are, unfortunately, a few things you simply can't cut back on. Things like the car seat are vital to the safety of the baby and you don't want to take the risk of using below-par products here.

Financial Assistance and Benefits for New Parents

There are a number of ways you can take advantage of some benefits available to those in the UK. Here are a few examples:

  • FREE dental care under the NHS while you're pregnant and for a year after the baby is born
  • FREE prescriptions while you're pregnant and for a year after the baby is born (in England)

You can claim these by filling in the Maternity Exemption Form (FW8) - available from your doctor or midwife.

Paid Time Off

  • Paid time off regardless of time spent in current job, in addition to your annual leave
  • Time off for medical and midwife appointments
  • Time off for recommended doctor's appointments
  • Two instances of time off for the father for doctors' appointments

You can file the claim for these on the government website here.

Maternity Leave

Here you are allowed to take the first 6 weeks at 90& pay, the next 33 weeks at a slightly reduced rate (the lesser of £184/week or 90% of pay), and the next 13 weeks after that unpaid.

Paternity leave is also available for up to two weeks.

Working Tax Credit

There is an additional allowance to help you prepare your savings for a baby if you're a low income earner - you can claim working tax credit to help you top up your earnings. This is being replaced by Universal Credit, and can be filed with HMRC on an individual case by case basis.

Sure Start Maternity Grant

Finally, there is a one-off payment available of £500 from the Social Fund to help with the cost of your baby. There are a few requirement to be met in order to be eligible for this, which are available here.

Building an Emergency Fund: Why It's Crucial When Expecting

This advice stays constant, whatever your financial goals are long term, and however you're investing your money. Start building an emergency fund early: 3-6 months of expenses is the recommended amount to keep in cash or short term securities that are immediately available. Of course, once you've had a baby, the level of these expenses will change so you'll have to put a bit more into the emergency fund around the same time that you're taking a hit on your monthly expenses. So if you're not careful it can all come at once!

Have a sit down with your partner and plan this in as much detail as possible - if you're not really aware here, costs can begin to spiral and you want to stay on top of these and ideally keep investing for your family's future, even as your expenses begin to rise.

Long-Term Financial Planning for Your Baby's Future

Note that if you're a "high earner" as deemed by HMRC, you'll have to pay back some or all of your Child Benefit in the form of extra income tax. However, it might still be worthwhile to apply for some protection to your state pension. As always, do your own research here. The extra income tax starts at £60k, and your reduction in Child Benefit starts at £100k, the same time as your annual allowance starts to taper.


So there you have it! We definitely haven't covered everything, but this is a great starting point for you to start totalling up the costs and working out the inputs you need for your Strabo dashboard. You'll need to come away with three things to input. Firstly, the lump sum up front investment that you'll need to start saving for. Secondly, the ongoing additional costs per month that this child will incur. Finally, how this will affect how much you'll be investing in the future, and where this will be split. Don't forget, when you do set up new accounts for your newborn, you can connect these to your Strabo dashboard too - tag them with an appropriate name, and start tracking them separately on a custom page.

Don't forget to share your templates and let us see how you're managing your family finances with one new additional member!

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