The 4-Step Essential Financial Checklist for New Parents

Having a baby is exciting, exhausting, and let’s be real - expensive.

Between sleepless nights and endless nappy changes, sorting your finances might not be top of your to-do list, but getting ahead of it now will make life a whole lot easier. Here’s a simple four-step financial checklist to help UK-based new parents stay on top of their money.

1. Understand Your New Income

Parental leave usually means taking a hit to your income, so it’s worth figuring out what you’ll actually have coming in. Some companies offer enhanced maternity and paternity pay—think full pay for a few months or a top-up to your statutory pay—so check what your employer offers before you start budgeting. It’s also worth looking at how your household income will change overall, including any shared bills and savings goals.

At a minimum, you can expect:

• Statutory Maternity Pay (SMP):
  
  • First six weeks: 90% of your average weekly earnings.
  • Remaining 33 weeks: £184.03 per week or 90% of your average weekly earnings, whichever is lower.
• Statutory Paternity Pay (SPP):
  
  • Up to two weeks of paternity leave, paid at £184.03 per week or 90% of your average weekly earnings, whichever is lower.
• Maternity Allowance:
  
  • If you don’t qualify for Statutory Maternity Pay (this is usually the case for people who are self-employed), you may be eligible for Maternity Allowance, which provides up to £184.03 per week for 39 weeks.
  • More info: gov.uk/maternity-allowance

Tips:

✅ Don’t forget your pension! Your employer's pension contributions during maternity leave are based on your actual maternity pay, not your full salary. If one partner is taking extended time off work or earning significantly less, the working partner can contribute to their pension to keep retirement savings on track. You can contribute up to £2,880 per year on behalf of a non-earning or low-earning spouse, and the government will top it up with 25% tax relief, bringing the total contribution to £3,600.

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✅ Have the ‘money chat’ early. Discuss how you'll manage finances once the baby arrives to ensure one partner doesn't shoulder more of the financial load. A joint account for shared expenses, with contributions proportionate to income, can help keep things fair.

2. Understand Your Child Benefit and Childcare Support

The UK government offers financial support to families, but you need to know the details to maximise your benefits.

Child Benefit:

• £26.05 per week for your first or only child.
• £17.25 per week for each additional child.
• High Income Child Benefit Charge: If you or your partner earns over £60,000, you’ll start paying some of it back through a tax charge.

Childcare Support:

• 30 free hours of childcare (from September 2025) for working parents with children aged 9 months to school age.
• Tax-Free Childcare – Get up to £2,000 per child annually to help with childcare costs.

The £100k Tax Trap

🚨 Earn over £100,000? You’ll start losing your personal tax allowance. For every £2 earned over £100,000, you lose £1 of your tax-free personal allowance, meaning income between £100,000 and £125,140 is effectively taxed at 60%.

TIP: If your household income is close to this limit, consider tax-efficient strategies like increasing pension contributions to reduce your taxable income and maintain eligibility for childcare benefits.

3. Write or Update Your Will

Having a will is vital for all parents as it ensures that if the worst happens, your partner, children, and any major assets are protected.

A will is the only place you can…

✅ Choose guardians for your children. 

✅ Decide how they inherit money – set up a trust if you want them to receive it at an older age. 

✅ Keep it updated – if your family grows, your will should reflect that.

How to write a will for free:

Leading estate planner Octopus Legacy has partnered with charities across the UK, so that you can write or update your will for FREE, until March 31st.

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Follow this link to claim your free will

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You can write your will in whatever way suits you best: online, over the phone, or face-to-face.

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The cost of your will is covered by whichever charity you choose – many choose to leave a gift to charity as a thank you, but this isn’t required. Last autumn, this campaign helped raise an estimated £9.9 million for charity through gifts left in wills, in just 2 months.

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You can write your will in a few simple steps:

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1. Follow this link.
2. Choose a charity to write or update your will with from the list provided.
3. Choose the right will writing service for you.
4. Lay out your wishes:
   
   1. Over the phone or in person: in an appointment with one of Octopus Legacy’s estate planning experts.
   2. Online: by following the step-by-step process.
5. Legal experts will review your will.
6. Your will is sent to you with instructions on how to sign it, making it legally binding.

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‍TIP: Keeping your will up-to-date

As your life changes, your will should too.

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It can be important to review and, if needed, update your will regularly, to ensure your wishes are still up to date. For example it’s worth checking if the guardians you chose are still appropriate and able to care for your children if something were to happen.

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Plus, if your family grows with more children, you’ll likely want your will to grow with it, and update the distribution of your estate, and the gifts you’re leaving.

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4. Sort Your Savings

Having a child can come with unexpected expenses, so building a financial cushion for yourself is just as important as saving for them. Whether it's for emergencies, big life milestones, or just the cost of raising a child (which, spoiler alert, isn't cheap), thinking ahead helps give you options down the line.

Your Savings:

💰 Short-Term Goals:

• A Cash ISA is a tax-free savings account where you don’t pay tax on interest earned.
• You can deposit up to £20,000 per tax year (2024/25 limit).
• Ideal for emergency savings or short-term goals.

📈 Long-Term Goals:

• A Stocks and Shares ISA lets you invest in funds, shares, or bonds.
• Higher risk than a Cash ISA but can offer better long-term growth.
• The same £20,000 per tax year limit applies.

Saving for Your Child:

👶 Junior ISA (JISA) – A tax-free savings or investment account for your child.

• Can be opened as soon as they’re born by a parent or legal guardian.
• Contribution limit: £9,000 per year.
• Two types:
  
  • Cash Junior ISA – Works like a savings account, grows tax-free.
  • Stocks and Shares Junior ISA – Invests in funds or shares, higher potential returns but also more risk.
• Locked until your child turns 18, at which point they gain full access.

Final Thoughts

By following this four-step checklist, you'll have a solid financial foundation to handle the rollercoaster that is parenting. From figuring out how to survive on parental leave pay to making sure your child has a financial head start, these steps will help you plan ahead without losing sleep (well, at least not over money).

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