Back to Guides

The Pre-Baby Financial Checklist: Everything You Need Sorted Before Baby Arrives

12 min11 Jan 2026

The Pre-Baby Financial Checklist: Everything You Need Sorted Before Baby Arrives

Congratulations on planning to expand your family. Now comes the part nobody tells you about: the financial preparation that will make the difference between enjoying your new arrival and lying awake at 3am worrying about money on top of everything else.

The good news? Most of this takes just a few hours to sort out. The bad news? Most parents do not do it, and 62% of millennial parents in the UK have no will at all. Do not be one of them.

Table of Contents

The Protection Stack {#the-protection-stack}

When you have a baby, you become irreplaceable. Not just emotionally, but financially. Your family's entire future depends on you being there, healthy and able to work. This is where the protection stack comes in.

Life Insurance

Life insurance should be your first priority. Here is why: premiums are based on your age and health at the time of application. Once you are pregnant, many insurers will either increase premiums or defer the application until after birth.

How much do you need?

The formula most financial advisers use:

  • 10-15x your annual salary
  • Plus outstanding mortgage
  • Plus other debts
  • Plus future childcare costs (approximately £15,000 per year for full-time nursery)
  • Plus education costs if private school is planned
  • Minus any death in service benefit from work
  • Minus existing life insurance

For a household earning £70,000 with a £250,000 mortgage and plans for one child, you are looking at approximately £500,000-£700,000 of cover per parent.

Term length matters. Choose a term that covers you until your youngest child would be financially independent - typically 25 years if planning children now.

Critical Illness Cover

Critical illness insurance pays out a tax-free lump sum if you are diagnosed with a specified serious illness, including most cancers, heart attacks, and strokes. Unlike life insurance, you receive the money while alive to use however you need.

Why it matters for new parents:

  • You might survive but be unable to work for months or years
  • Treatment and recovery costs add up
  • One parent may need to become a full-time carer
  • Mortgage payments still need to be made

Typical cover: £100,000-£250,000. Costs approximately £15-40 per month for a 30-year-old depending on cover level.

Income Protection

Income protection pays a monthly income (typically 50-70% of your salary) if you cannot work due to illness or injury. Unlike critical illness which pays once, income protection continues paying until you return to work or reach retirement.

Key considerations:

  • Deferred period: How long before payments start (typically 4-26 weeks)
  • Benefit period: How long payments continue (to age 65 or 68)
  • Own occupation vs any occupation: The former pays if you cannot do YOUR job, the latter only if you cannot do ANY job

For new parents, income protection provides crucial ongoing support rather than a one-off payment.

Legal Documents You Need {#legal-documents-you-need}

A baby does not just change your life - it changes what happens if you are no longer here to live it.

Will with Guardian Appointment

This is non-negotiable. A will is the only legal document where you can name who should raise your children if you die.

Without a will:

  • The court decides who raises your children
  • Your assets are distributed according to intestacy rules, not your wishes
  • Your partner (if unmarried) may receive nothing
  • The process takes longer and costs more

What your will needs to include:

  • Testamentary guardians: Who raises your children
  • Backup guardians: In case your first choice cannot or will not do it
  • Executors: Who administers your estate
  • Beneficiaries: Who inherits what
  • Trusts for children: Because an 18-year-old inheriting £500,000 outright is rarely wise

Read our complete guide to choosing guardians for your children.

Lasting Power of Attorney (LPA)

An LPA allows someone you trust to make decisions on your behalf if you lose mental capacity. There are two types:

Property and Financial Affairs LPA

  • Manage bank accounts
  • Pay bills
  • Sell property
  • Make investment decisions

Health and Welfare LPA

  • Medical treatment decisions
  • Where you live
  • Daily care choices
  • End-of-life decisions

Why you need both before baby arrives:

Imagine you have a traumatic birth and are in a coma. Without an LPA:

  • Your partner cannot access your bank accounts
  • They cannot make medical decisions for you
  • They would need to apply to the Court of Protection (costs £400+ and takes months)
  • Meanwhile, bills stack up and decisions cannot be made

LPAs cost £82 each to register with the Office of the Public Guardian. You can complete them yourself online at gov.uk or use a service for approximately £100-200 per LPA.

Learn more in our guide to Lasting Power of Attorney explained.

Letter of Wishes

While not legally binding, a letter of wishes supplements your will with:

  • How you want your children raised
  • Values and beliefs to instil
  • Education preferences
  • Family traditions to continue
  • Specific messages for your children

Update this regularly - it is much easier to change than a will.

Emergency Fund & Savings {#emergency-fund-and-savings}

Your pre-baby emergency fund needs a serious upgrade.

Why 6 Months is the New 3 Months

Before children, losing your job is stressful but manageable. With a baby:

  • You cannot just "find any job" - it needs to cover childcare costs to be worth it
  • Interview availability is limited
  • Stress affects milk supply for breastfeeding mothers
  • You may need to turn down jobs that require long commutes or travel

Target: 6 months of essential expenses in an easy-access savings account.

Essential expenses include:

  • Mortgage or rent
  • Council tax
  • Utilities
  • Food
  • Insurance premiums
  • Minimum debt payments
  • Basic childcare (if returning to work)

Where to Keep Your Emergency Fund

Baby-Specific Savings

Beyond your emergency fund, consider setting aside:

Pre-birth costs: £500-2,000

  • Nursery furniture
  • Pram and car seat
  • Clothing
  • Hospital bag essentials

First year contingency: £1,000-2,000

  • Unexpected medical costs
  • Equipment failures
  • Additional childcare
  • Return to work wardrobe

Understanding Maternity & Paternity Pay {#understanding-maternity-and-paternity-pay}

This is where most parents get a nasty surprise.

Statutory Maternity Pay (SMP) 2025/26

If you qualify, you receive:

  • First 6 weeks: 90% of average weekly earnings
  • Remaining 33 weeks: £184.03 per week OR 90% of earnings, whichever is lower
  • Final 13 weeks: Unpaid (if you take the full 52 weeks)

To qualify, you must:

  • Have worked for your employer for 26 weeks by the 15th week before your due date
  • Earn at least £123 per week on average
  • Give correct notice

Statutory Paternity Pay (SPP) 2025/26

Partners can take:

  • 1 or 2 weeks of paternity leave
  • Paid at £184.03 per week OR 90% of earnings, whichever is lower

Shared Parental Leave (SPL)

Parents can share up to 50 weeks of leave and 37 weeks of pay between them. This requires:

  • Both parents to qualify
  • The mother to "curtail" her maternity leave
  • Significant paperwork and advance notice

Enhanced Maternity Pay

Some employers offer enhanced packages. Check your contract for:

  • Full pay for X weeks
  • Percentage of salary for Y weeks
  • Whether you must return to work to keep the enhanced pay

The Income Drop Reality Check

For a mother earning £40,000 per year (approximately £2,660 net per month after tax):

PeriodMonthly IncomeDrop from Normal
Weeks 1-6£2,394-10%
Weeks 7-39£797-70%
Weeks 40-52£0-100%

This is why maternity leave planning is essential.

The Real Cost of a Baby {#the-real-cost-of-a-baby}

Forget the cute outfits on Instagram. Here is what babies actually cost.

First Year Costs

Ongoing Monthly Costs

Childcare (the big one):

  • Full-time nursery (England): £1,200-1,800 per month outside London, £1,500-2,500 in London
  • Childminder: £800-1,400 per month
  • Nanny: £1,800-3,500 per month net
  • Government-funded hours start at age 2 (disadvantaged) or 3

Other ongoing costs:

  • Nappies and wipes: £50-80 per month
  • Formula/food: £50-150 per month
  • Clothing (they grow fast): £30-60 per month
  • Healthcare (vitamins, occasional prescriptions): £10-20 per month
  • Activities and toys: £20-50 per month

Hidden Costs Nobody Mentions

  • Bigger car: Car seat requirements may force an upgrade
  • Home modifications: Stair gates, socket covers, furniture anchors
  • Takeaways: You will be too tired to cook some nights
  • Lost income from sick days: Babies get ill. A lot.
  • Professional cleaning: Because you will not have time

Income & Budget Planning {#income-and-budget-planning}

Now that you know the costs, here is how to plan.

Step 1: Calculate Your Maternity/Paternity Income

Create a month-by-month projection:

  • Month 1-2: Enhanced pay or 90% of salary
  • Month 3-9: SMP rate plus any enhancement
  • Month 10-12: Unpaid or return to work income

Step 2: Create a Baby Budget

Add baby costs to your current essential spending. Be realistic about:

  • Whether you will actually use cloth nappies
  • Whether you will actually meal prep
  • Whether family will actually help as much as they promise

Step 3: Find the Gap

Monthly income during maternity - monthly expenses = the gap

If negative, you need to:

  • Build savings to cover the gap before baby arrives
  • Reduce other expenses
  • Plan for earlier return to work
  • Investigate additional income sources

Step 4: Plan Your Return to Work

Childcare costs must be weighed against income:

  • Calculate your take-home pay after childcare costs
  • Factor in commuting costs
  • Consider Tax-Free Childcare (up to £2,000 per year per child)
  • Check if your employer offers childcare vouchers (closed to new entrants but if you're already enrolled, continue)

Workplace Benefits to Check {#workplace-benefits-to-check}

Before you start paying for everything yourself, find out what your employer offers.

Death in Service Benefit

Many employers provide life insurance at 2-4x your salary. Check:

  • The exact multiple
  • Whether it increases when you have children
  • Who it's paid to (update the nomination form)
  • Whether it covers you during maternity leave

Private Medical Insurance

Does your policy cover:

  • Pregnancy complications
  • Private midwife care
  • Private birth
  • Your children once born

Employee Assistance Programme (EAP)

Free confidential support for:

  • Financial guidance
  • Legal advice
  • Mental health support
  • Work-life balance coaching

Childcare Support

  • Tax-Free Childcare eligibility
  • Emergency childcare services
  • Flexible working policies
  • On-site nurseries or nursery partnerships

The Pre-Baby Financial Timeline {#the-pre-baby-financial-timeline}

Frequently Asked Questions {#frequently-asked-questions}

Key Takeaways

  • Protection first: Life insurance, critical illness, and income protection should be in place before pregnancy when premiums are lowest
  • Legal documents are essential: A will naming guardians and LPAs for both parents are non-negotiable
  • 6 months emergency fund: Your old 3-month buffer is not enough with a dependent
  • Maternity pay drops dramatically: After 6 weeks at 90%, you will receive just £184.03 per week
  • First year costs £6,000-£12,000: Plus ongoing childcare of £800-1,800 per month
  • Start 6-12 months early: Good financial preparation takes time

Next Steps {#next-steps}

Related Guides:

Last updated: January 2026. This guide is for informational purposes only and does not constitute legal or financial advice. Laws and figures are specific to England and Wales unless otherwise stated. Maternity pay rates are for 2025/26 tax year.

Last updated: 11 January 2026