Managing money with kids: creating a budget that works for your family
Having kids brings joy, adventure, and, let’s be honest, a whole new world of expenses. From nappies and nursery fees to the “I’ve outgrown my shoes (again)” saga, spending never seems to stop. The good news? You don’t need to be a spreadsheet wizard to stay on top of family finances. If you can survive a 3am wake-up, you can build a plan that works for you all. Let’s break it down.
Create a realistic budget
When you become a parent, it’s even more important to know where your money’s going, and what’s coming up next. A budget is simply a plan for your money. It shows what you have coming in, what’s going out, and what’s left over. Having that overview can help you avoid nasty surprises and spot where you might be overspending.
Check in on your budget regularly
Family costs aren’t always predictable and your expenses might jump around from month to month. So don’t treat your budget like a one and done thing; check in with it regularly and update it whenever you need to. Spotting big expenses early gives you options. You might cut back in a few places, shop around for cheaper deals, or look for ways to boost your income.
If you’re thinking about borrowing to spread out costs, take a moment to understand how it’ll impact you long-term. Check out this article if you’re not sure.
Build a rainy day fund
A budget isn’t just about getting through the month. It can also help you prepare for the unexpected, whether that’s an emergency vet bill or yet another surprise growth spurt. Try setting aside a little money for emergencies in a dedicated Pot. Having a buffer can make stressful moments feel a bit more manageable.
Consider sharing finances
If you’re raising kids with a partner, you might want to get a joint bank account. This can make it easier to get a shared view of your bills, childcare costs and day-to-day spending. There are a few things to consider before sharing your finances though, so make sure you understand the implications. Ultimately, when it comes to the matter of sharing money, the key is to do your homework, and make sure you really trust the person you’re sharing with.
Future-proof your finances
Once your budget’s in place, you can start thinking longer-term. That might mean stretching your money further, easing pressure on day-to-day costs, or setting your kids up with healthy money habits for the future.
Here are a few places to start…
Cutting kids’ costs
Kids are wonderful, but they’re also expensive. When they’re not eating everything in the fridge, they’re outgrowing clothes or ‘experimenting’ with your expensive skincare. In fact, the average cost of raising a child to 21 is around £230,000.
Here are some ways to bring that figure down:
Source second-hand bargains: babies and young kids grow fast, so hand-me-downs can be a great way to keep costs down. Remember, little ones don’t notice labels or price tags, so you don’t always need the fanciest version of everything. Friends might also be glad to pass on clothes their kids have already outgrown. You can find free or cheap items on sites like Vinted and Freecycle, too.
Enjoy low-cost days out: look for free activities on Visit England and Timeout. Children under 5 usually travel free on trains when accompanied by an adult, and kids aged 5 to 15 can get discounted fares. A Family & Friends Railcard can also help you save on travel for the whole family.
Check if you’re entitled to free childcare: in England, all 3 and 4 year-olds get some free childcare, with extra hours available for eligible working families. Check your local government website to see what you can apply for.
Get help with childcare costs: you could get up to £2,000 per child each year through the government’s Tax-Free Childcare scheme, depending on your income.
Get support if you’re a single parent: charities like Gingerbread and One Parent Families Scotland offer advice and support about money and benefits.
Teach your kids about money
Want fewer supermarket stand-offs? Talking to your kids about money can really help. Children start forming financial habits surprisingly young, so it’s never too early to explain the basics. Here are some simple ways to get started:
Teach them to wait: if they want a toy that’s not in budget, explain why. You might agree it’s something they can have for a birthday or Christmas instead.
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 by setting up a kids’ savings account. If they’re tempted to spend the money on something else, explain how much longer they’ll have to wait to reach their goal. Our optional in-app saving sidekick will also celebrate and react to your child’s progress, so saving can feel as fun as spending.
Involve them in money decisions: when you’re food shopping, ask them to help you compare products or prices. It’s a simple way to show how decisions affect your budget.
Plan ahead
Some parts of financial planning aren’t easy to think about, but they’re still important.
Your will: a will lets you decide who’ll look after your children and manage their money if the worst happens. A legal professional can help make sure it’s done properly.
Life insurance: if your family relies on your income, life insurance can help provide financial support if you’re no longer around. Depending on the policy, it can pay out a lump sum or regular payments.
Rethink your savings goals: starting a family can change what you’re saving for – a home nearer grandparents, a bigger car, or future education costs. Build these goals into your budget so you’re putting money aside regularly.
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.
Ready to start saving?
Taking control of your family finances won’t make everything stress-free, but it can make things feel more manageable. And that’s a win worth budgeting for.
Ages 6-15, UK residents only. Parent/Guardian account needed. Interest paid monthly. £10,000 maximum in savings per child. Ts&Cs apply.