What do we need to do financially when expecting a baby?
Congratulations, this is an exciting time. The reassuring part is that your finances don't all need sorting at once. Over the coming months, the things that matter most are planning for a dip in income during parental leave, understanding your childcare and child benefit options, and making sure your growing family is properly protected.
Plan for the income drop during leave
The biggest near-term change is usually a temporary fall in household income. Statutory Maternity Pay typically runs for up to 39 weeks: 90% of average weekly earnings for the first six weeks, then a flat rate of around £187 a week in 2025/26, or 90% if that's lower. Statutory Paternity Pay is usually two weeks.
Many employers offer more generous enhanced pay, so it's worth checking your contract and having a plan in place before the birth to reduce any stress.
Check your childcare and child benefit position
Once your baby arrives you can claim Child Benefit, worth around £1,350 a year for your first child, but the High Income Child Benefit Charge claws it back once the higher earner's adjusted net income passes £60,000, with none left above £80,000.
The £100,000 cliff usually matters later, when you return to work and start paying for childcare: above it, you typically lose Tax-Free Childcare and the government's free childcare hours entirely.
Pension contributions can lower your adjusted net income, which is why many parents near these thresholds plan ahead. See salary optimisation for how this works.
Protect your growing family
A dependent changes the protection picture. With someone now relying on your income, most parents look at life insurance and income protection, and check that any workplace cover is enough on its own.
It's also the moment to write or update a will, name guardians for your child, and check the beneficiaries listed on your pensions. Our protecting your plan piece covers this in more detail.
Saving for your child
Once the essentials are in place, you can start thinking about putting money aside for your child. A Junior ISA, with a £9,000 a year allowance, can be a tax-efficient home for this, though it can only be opened once the baby is born. Money invested early has years to grow.
It's also worth knowing that grandparents and other family often like to contribute. Anyone can pay into a child's Junior ISA once it's open, so it can be a natural place for gifts to build up over time.
