Money hacks How to get your finances ready for a new baby

Raising a child from birth to the age of 18 costs, on average, £166,000 for a couple, and £220,000 for a lone parent in 2023, according to Child Poverty Action Group's annual cost of a child report. Affordability is regularly cited by people who would like to have children as a key reason for holding off doing so.

- Sandra Haurant

Consider cutbacks

Whether you're expecting a baby or you're hoping to start a family soon, the first place to begin sorting out your finances is by seeing if you can cut back on what you owe and spend, says Sarah Coles, head of personal finance at the advice firm Hargreaves Lansdown.

“Do this as early as possible, starting with the easy things - like not overpaying for insurance and TV, and switching any short-term debts to the lowest possible interest rate,” she says.

Review any mortgage

“A mortgage is probably your biggest outgoing, so keep this under close review to make sure you're getting the best rate, and keeping payments down,” says David Hollingworth of London & Country mortgage brokers.

“If you are remortgaging or buying a new family-size home,” Hollingworth adds, “think about the stability you need and consider a fixed rate.” A longer-term fix gives the certainty of knowing what your monthly repayments will be for the coming few years.

Switching to a cheaper deal, if you can, when you reach the end of your current fixed-rate period, will reduce monthly repayments, and extending your mortgage term will push them down further.

“If you have a remortgage looming, you might want to consider a longer-term deal to reduce monthly costs,” Coles says.

However, she adds: “This will mean paying the mortgage later in life - which could derail your retirement plans - so don't rush into anything without thinking through all the implications.”

It will also mean higher overall interest costs unless you reduce the term again later.

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