If you’re earning less as a household (if one of you has to take time off work when baby arrives) but have extra costs, something’s got to give. Think about where you could be making savings - it could be the Friday night takeaway, that rarely used gym membership, or the new sofa or TV.
review your spending
You may both need to cut back your spending to cope with the cost of a baby. Couples with children spend £170 a week each, compared with £289 a week each for couples without.
Discuss these challenges with your partner. If you're both aware of the issues and responsibilities ahead, you’re more likely to be able to tackle them together.
Setting a family budget
Getting your head around a new family budget isn't always easy but help is at hand. Use our Budget planner to get a handle on all your income and outgoings.
A problem shared, a problem halved
Shared responsibilities like a new baby demand joint decisions around household budgeting.
- Talk frankly about money – don’t keep any financial secrets and there won’t be any surprises.
- Set some ground rules – agree not to buy anything over a set limit, say £50, without discussing it with each other first.
- Make time – household budgeting is important, so set aside regular time to discuss and agree money matters.
Find out more in Should you manage money jointly or separately.
Manage your money in a way that works for you
There are various ways to split and share the family budget. We’ve outlined the four main ones below.
Consider them all – each has its pros and cons – and decide which one suits your circumstances. If it doesn’t work out, try a different one until you find one that you and your partner find works for you.
Option 1: Keep everything separate and split the bills equally
You each look after your own money but agree to either share every bill or for one of you to pay for some things, like the weekly shop, while the other pays for others, like the rent or mortgage.
Option 2: Share everything
If you’re open and trust each other 100% with money, you can pool your household income in a joint bank account which then pays for everything.
Option 3: Divvy it up into mine, yours and ours
This way, you each keep your own account but also pay money into a joint account to cover household bills and family expenses.
Option 4: Take the personal allowance route
The main breadwinner transfers an agreed amount each week or month to their partner. Any money that each has left over after paying for household expenses is theirs to do with as they wish, providing some financial independence.
- Budgeting helps you avoid nasty shocks when you read your bank statement or tot up your spending at the end of the week or month.
- It helps you decide where you need to cut back and when you can splash out.
- Knowing where you stand now helps you plan ahead for the future.
- It’s simply a good habit to get into!
It can be hard making the time when you have a baby, but people who set aside time to budget and then follow it up every week or so, quickly notice the benefits in their pocket.
Money fitness tip
Talk about money with your partner, don't bottle it up. Watch Andy and Mel's video to see how they coped on the arrival of their twins.
Preparing a household budget – how to get started
Despite how daunting it might sound, a budget is nothing more than a list of all your income and spending. And it must be an honest list. If you stick your head in the sand or fudge some of the figures, it will only lead to nasty surprises later on.
This is everything that comes into the house – wages, benefits, maternity pay. Don’t forget that this might go up or down, depending on what your plans are in the future – will you stay at home, start or return to work? If you receive allowances, don’t forget that rates or your entitlement might change in future, so don’t take them for granted.
This is everything that goes out, from mortgage or rent, to household bills, food, travel costs, newspapers and snacks. Don’t forget outgoings such as what you might spend in the Junior Ranks Club or Mess. Again, remember that things will change – nappy costs will eventually disappear but with a growing child in the house, food costs will go up.
Then use our Budget planner to see where you stand. You just put in the figures and it will do the maths for you.
If you’re struggling to remember everything...
You won’t be alone. Most people underestimate how much they spend each week. However, there are a few tips to help you fill in the gaps.
- Keep a diary for a week or two, and note down everything you spend. You could use a smart phone if you have one - there are plenty of free apps to help, but a low-tech pen and paper works just as well.
- Hold onto all your receipts, check bank and credit card statements for non-cash payments.
- Set a date to tackle your budget with all this to hand. You’ll be glad you did.
For more tips on keeping your finances MoneyFit see our Savvy spending section.