What financial support is available for new parents?
Various financial support is available from the government for new parents and families. These are outlined on the government's website.
Child Benefit is awarded at £20.70 per week for the eldest or only child, and £13.70 per week for any additional children. It’s usually paid every 4 weeks, but if you’re a single parent or receiving other benefits such as Income Support, then you can request it weekly.
Find out more about child benefits.
Once your child reaches the age of 3, you’re entitled to 30 hours per week free childcare.
Some families that are receiving certain benefits can also receive 15 hours from the age of 2. You can find out more about the free childcare hours here.
Childcare vouchers are also available which allow you to trade £55 per week of your wages in for discounted childcare . Not all employers offer this scheme so you need to check with yours. If you’re able to receive them you won’t need to pay tax or National Insurance on the amount you claim.
Bear in mind, from October 2018 they’re no longer accepting new applicants as the system is being replaced with Tax-Free Childcare. With this, you could receive up to £2,000 per year to put towards the cost of childcare for each of your children.
Find out more about Childcare Vouchers.
Child Tax Credit
You can apply for Child Tax Credit if you aren’t living in a Universal Credit area. The amount you’re eligible for will depend on your household income, the area you live, how many children you have and when they were born.
If you’re making a new claim, you need to order a claim form which can take up to 2 weeks to arrive, and then up to 5 weeks to process once you’ve sent it back.
Find out more about how you can claim for Child Tax Credit.
If you’re in full-time education and have a child under the age of 15 (or 17 if they have special educational needs). Depending on your income, you could claim up to 85% of your childcare costs, up to a maximum of £159.59 per week for one child, or £273.60 for 2 or more.
As with most of the government schemes, you’ll be means tested and will your household income, cost of childcare and the number of children you have will be taken into account.
How much does it cost to raise a child?
The average cost of raising a child from birth to the age of 18 is £75,436 for a couple and £102,627 for a single parent family - not cheap.
Saying this, looking at the cost over a long period is overwhelming and not overly useful. Instead start by understanding the crucial bits you need to buy and, how much they will cost you on a monthly basis.
How to avoid common financial mistakes made by new parents
There’s no rule book on how to tackle the expense of having a kid. But here are 3 points to remember:
- Don’t forget the food.
Although you may plan to breastfeed your baby, you may need to turn to formula. If you’re planning a budget then don’t forget to include this, just in case. Of course, you’ll need to think about baby food costs once they hit weaning at 6 months.
- Don’t forget to save.
It’s easy to spend all your money on a new child, but you’ll still need to plan for the future. It’s important to still budget for putting money aside into savings that will help you for anything unexpected or for your retirement.
- Don’t feel like you need to buy everything new.
There’s a huge selection of second-hand baby items online at a fraction of their original retail costs, and apart from a couple of exceptions, you don’t need to buy everything brand new. Bundles of baby clothes, nursery furniture and electrical items like sterilisers are all available on Gumtree, eBay and at local baby events and searching for bargains will help cut the cost of a new baby.
Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.