Family finances: how to budget, save and plan for your child’s future

Having children is one of life’s most fulfilling experiences, but it inevitably puts quite a dent in the family finances.

From baby essentials and daily expenses to long-term aims like university savings, the cost of raising a child in the UK rises each year.

According to the Child Poverty Action Group, the basic cost of raising a child to age 18 now exceeds £260,000 for couples and £290,000 for single parents.

As living costs and childcare fees increase, it can be difficult to keep family finances on an even keel.

Here we outline how early planning, careful budgeting and exploring support options can help you cope financially with the many changes children bring.

Planning family finances for pregnancy and the early years

Preparing for a baby involves both budgeting and excitement. Besides prams, cots, and nappies, a significant hidden expense comes from reduced income during parental leave.

This is why it’s a good idea to review your household finances early, including potential income changes during maternity or paternity leave. Doing this will let you know what you’ll have to work with in terms of money. This will help you to set a baby budget to account for one-off purchases and ongoing costs.

Building a small savings buffer is another wise step. Having funds to cover several months of expenses can reduce stress during those initial sleepless months. Many parents find it helpful to break costs into stages, from pregnancy to school age, so spending feels manageable and planned.

How a Financial Adviser can support early-years planning

Working with a financial adviser can help you prepare your family finances for the new arrival, from immediate concerns like loans and mortgages to future considerations such as the impact on pension contributions.

Government benefits and financial support for new parents

Government support can significantly benefit new parents. Statutory maternity pay offers up to 39 weeks of payments, with the first six weeks at 90% of average weekly earnings and the remaining period at a lower rate.

Paternity leave provides up to two weeks of paid leave, while self-employed parents may be eligible for a maternity allowance based on their National Insurance contributions.

You may be able to take extended maternity and/or paternity leave by negotiating with your employer, although you’ll need to figure out how to cope with the shortfall in income.

Once your child arrives, child benefit can help with ongoing cost. Current rates are currently £26.05 a week for the first child and £17.25 for each additional child so make sure you register for the benefit.

Even if higher earners face a partial or full clawback through the High Income Child Benefit Charge, claiming still provides National Insurance credits for non-working parents, protecting future state pension rights. The payments can be turned off if the claimant knows there will be a full clawback.

It is also important to recognise that these benefits and the rules surrounding them can change.

Managing childcare costs and maximising available support

Childcare is one of the largest expenses families encounter. Often, fees for nurseries or childminders can be as high as a mortgage.

Through the government’s Tax-Free Childcare scheme, eligible working parents can claim up to £500 every three months (up to £2,000 a year) for each child to help with childcare costs. This amount increases to £1,000 every three months if a child is disabled (up to £4,000 a year), and parents of disabled children can receive double that amount.

As of September 2025, parents in England with children under five have been able to access up to 30 hours of free childcare per week, matching schemes already available in Scotland and Wales.

These schemes can considerably reduce household costs, although availability and eligibility vary by region.

Family support, whether through shared care or financial assistance from grandparents, remains a crucial yet often overlooked factor in alleviating childcare pressures.

It is important to note that childcare vouchers are subject to income. If you or your partner earns over £100,000 a year, in most circumstances you will not receive them.

How financial advice helps parents optimise childcare costs

It is in situations like this that getting expert financial advice can really pay off. Your financial adviser will be able to help you plan the most tax-advantageous approach to maximising the benefits you can claim.

For example, if you earn £120,000 a year, you could decide to sacrifice £20,000 of that into your pension for the three years your child is in nursery. This will boost your pension pot by £60,000 and will mean you won’t miss out on childcare vouchers to help you pay those nursery fees.

Keeping your family finances healthy

While raising a child inevitably shifts priorities, it’s important not to neglect your own financial future. And on occasions, the two can complement each other really well.

Why you should keep contributing to your pension

It’s vital to continue your pension contributions, even if you’re finding it tough and drop to a lower level.

Your greatest ally in building up your pension pot is time so don’t miss out on years of contributions.

Building an emergency fund for your family

It’s a good idea to maintain a separate household emergency fund to cover unexpected expenses, such as home repairs or healthcare costs. This means you’ll be able to dip into the fund without upsetting your monthly budget.

Essential protection policies for parents

Protecting your family against unforeseen events is another essential step. Life insurance, critical illness cover, and income protection can safeguard your household if illness or loss of income occurs. Updating your Will ensures that your children are cared for and your assets are distributed according to your wishes.

Unmarried couples, in particular, should seek professional advice to make sure their arrangements are recognised.

How a financial adviser can help

Your financial adviser can map out how changes in your pension contributions could affect your retirement plans. They can also source the most competitive and comprehensive insurance and protection policies to ensure your family will be well looked after should the unexpected happen.

Investing in your child’s future: school fees, university and housing support

Looking further ahead, you’re likely to want to make provisions for your child’s education and future.

With private school fees now attracting VAT, the cost of giving your child an independent school education has spiralled. Careful planning – and potentially help from other family members – could be needed if this is something you want for your child.

Going to university is also not cheap. There’s rent, food, entertainment and travel costs on top of the tuition fees paid.

And when it comes to your child setting up their own home, putting together the money required for a first house could mean them looking towards the bank of mum and dad.

Financial planning support as your child grows

From ways of financing school fees to property acquisition, your financial adviser can help you at every stage as your child grows.

Whether it’s gifting, loans, saving or investing, your adviser will not only look out for your offspring, they will also be making sure your own financial wellbeing isn’t sacrificed.

Key takeaways: building a strong financial future for your family

Starting a family is a major life event. Expert advice from a financial adviser can help you put a practical plan to meet every challenge along the way.

We can work with you to ensure your short-term priorities and long-term goals are both catered for and the best strategies are used to safeguard and grow your family’s wealth.

Get in touch today to begin your family finance journey.