How to manage money when you have kids 👶

Create a budget – when you become a parent it’s even more important to know what costs are coming up and whether you can afford them. A household budget will help you do this – it sets out how much you expect to earn and spend each month. As a young family your expenses may change from month to month, so review your budget regularly.

Balance your budget – you may find your income won’t cover your expenses. It’s good to know this early on, so you can cut spending or earn more before it becomes a problem. If you want to use credit to spread costs, make sure you know what to consider before borrowing.

Build a rainy day fund – sticking to a budget can help you save for the future (more on that later). But first, consider creating a pot for emergencies and unexpected growth spurts!

Consider sharing finances – if you’re having kids with a partner, you may want to get a joint bank account. This can make it easier to budget money together. There are a few things to consider before sharing finances, such as joint debt and linked credit reports.

Kids are expensive. When they’re not eating the contents of your fridge or outgrowing their shoes, you can find them pouring your best perfume down the toilet. In fact, the average cost of raising a child to 21 years is £230,000! Here are some ways to bring that number down:

Second-hand stuff – babies and young kids outgrow their things in a flash, so ask around for hand-me-downs. You can also find freebies on Freeloved and Freecycle.

Cheap family outings – you can find free activities via Visit England and Timeout. Train fares are free for under fives and 50% off for under 15s. Plus, you can get a third off with a family railcard.

Free childcare – most kids aged three to four get 30 hours of free childcare per week in England, 50 in Scotland, 12.5 in Northern Ireland, and at least 10 in Wales. Visit your government website to apply.

Help with childcare costs – you may also get up to £2,000 per year via the government’s tax-free childcare scheme. You must meet certain criteria, such as earning over £125.28 per week. If you earn less than this, you can normally get child tax credit or universal credit instead.

Support for single parents – single parents can get advice on finances from charities such as Gingerbread and One Parent Families Scotland.

Want fewer tantrums at the shops? Try explaining why you need to stick to a budget. It’s never too early to learn good money management either – children can form financial habits by the age of seven. Here are some ideas for lessons:

Teach them to wait – for example, if your kid asks for a toy, explain that you haven’t set aside money for it. You could say they need to wait until their birthday or Christmas.

Encourage them to save – help your child set a savings goal. Give them a place to store their pocket money and a way to measure progress. If they’re tempted to spend the money on something else, explain how much longer they’ll have to wait to reach their goal.

Involve them in money decisions – for example, while grocery shopping you could ask them to help you choose between products. Help them understand the consequences of each decision. Give them an app – for example, RoosterMoney lets kids track their pocket money and create savings goals.

Your will – it’s not a happy subject, but it’s important to consider what’ll happen to your kids if you die. You can protect them by making a will. This lets you name who’ll look after your children and manage their money until they’re 18. Use a legal professional to ensure your will is done properly.

Life insurance – if your children, partner or relatives rely on your income, they may struggle with living costs if you die. Life insurance can protect them if this happens. It’s designed to pay out a lump sum or regular amounts, depending on the type of cover you choose.

Rethink your savings goals – starting a family can change your saving goals or make them more urgent. You may need to save for a bigger house, a safer car or your child’s education. Work your savings goals into your budget so you’re putting away enough each month.

Find the right savings account – research the different types of savings accounts to find the best one for your family’s goals. You may want to open a junior ISA or children’s bond, which your kid can only access when they turn 18.

Next, find out how you can use Monzo to help you budget. And for more tips on how to save and budget better, head to Monzo Money Tips!