Your life has changed. Big time. You have a dependant, or dependants.

As well as taking on care duties, you have more financial responsibility. Children aren’t cheap and you want them to always be comfortable and to share great experiences with them.
Here’s the MUVADO five step plan to help new parents get financially secure and build their ideal life. This is financial planning for new parents.

1. Build your baby bump

It’s often important to have a little extra cash ahead of expanding your family unit. There will be expenses, and an additional ‘baby bump’ is important when providing for children.

Calculate your ‘noodle budget’ by understanding what your ‘can’t do without’ expenses are, and we mean really ‘can’t do without’. The food budget is the cost of maintaining your calories on pot noodles; hence noodle budget. We tend to recommend MUVADO members hold anywhere between 3 and 6 months of your noodle budget as cash at all times.
For expectant parents or people planning to have children, also look at your parental leave pay and calculate any additional shortfall of income to meet your expenditure in the early months of being a new parent. Get a forecast from your employer or calculate your net salary personally. If you’re self-employed, check your statutory leave.

One off costs also need to be budgeted for. We have calculated the basic needs of a baby in the first year require a minimum of £1,550 to cover; and that’s for a very basic level.

2. Always have protection

Not like that. We support procreation.

What we mean is, what plans have you got in place if the worst were to happen? We know this is a morbid topic but it’s an important one. Especially important to have in place when you have children, or in technical speak, ‘financial dependents’.

Check you have legal documents in place for death and disability, including a will and Lasting Powers of Attorney. Having a will in place ensures your assets are distributed according to your wishes and naming guardians will stop your child going into care if both parents were to die (morbid just turned double morbid!).

Difficult conversations are needed to ensure you fully understand the current financial protection in place and any gaps that could be filled with additional insurance policies. What would life look like if one of you were to die? What debts need to be paid and what income needs to be replaced?

We hope financial protection policies are the biggest waste of money ever. Too often, we’ve seen plenty of circumstances where having these things in place is essential and where not having cover is heart-breaking. Speak to an independent financial planner now to check your position and make any changes needed.

3. Your new outlook

“Life isn’t better before kids or after kids, it’s just different.”

Having children often changes perspectives. By clarifying what’s most important to you now, you can build your finances to meet your ideal life.

Understanding your family’s values and how you want to be seen by your children can help inform every money decision you make as a family. Check you are spending your money on things that are important to you and saving enough towards the lifestyle you want when your children eventually flee the nest.

Creating a vision of where you want to be in 3, 10 and 20 years is also helpful. Having a vision gives a general direction – you don’t have to stick to it and you should review it at least annually to reflect any changes. Having direction can help you stick to your current savings plans and also help you live for today and worry less about the future.

4. Put your own life jacket on first

Saving for yourself first will benefit your children in the long run. The days of long-term single company employment and satisfying pension payments from state pension age are fading, and in most industries totally gone. The only thing that will support you when you stop work (other than the state pension – living off c.£800pm anyone?), is yourself.

Building a savings and investment pot to meet your future expenditure needs is essential, and the earlier you can start, the better. If invested sensibly, the savings you make now will be worth more at the point you stop work than savings you make nearer the time.

At MUVADO, we call your life savings your ‘money mother dough’. In the same way a mother dough in baking can last for years baking sourdough loaves, your money mother dough has to sustain you in the years when you have stopped work. Habitual saving, low cost, high diversification, tax efficiency, balancing risk and reward and patience are the bases of a successful money mother dough. By following a process and providing the right conditions, you can build your money mother dough with the aim of supporting yourself first and then your children and future generations.

5. How wealthy do you want your children to be?

If your own savings are sorted you’re projected to build the life you want AND you can afford to make additional savings for your children, you should consider the following two questions

• How much money do I want my child to have?
• When do I want my child to have it?

Most children’s savings options will allow your child full access to their savings from age 18. If you’d rather not predict your child’s money behaviours at age 18, consider saving for yourself and deciding on how much to gift your children later. If you’re comfortable with giving your child direct savings now, research the use of Junior ISAs and child savings accounts to find the most suitable option for you (or just download my book – see summary).


Nail these five steps and you’ll be financially secure for catastrophic events and well on your way to financial freedom. For further detail on all the 5 financial planning steps for new parents, you can download and read ‘the ultimate financial guide for new parents’ online at www.muvado.co.uk/book or contact me (gregory@muvado.co.uk) for a new parent financial planning checklist.

An independent financial planner can be a massive help when you start a family and can provide advice to put you on the pathway to financial security and freedom. MUVADO are specialists in working with new parents and young families.