Guide to family finances

Suddenly life's priorities change when a baby's on the way. There's lots of excitement and anticipation - mixed in with a little apprehension.

We'd suggest you take some time out with your partner to plan your financial future - so you can relax and get on with planning for the new arrival. Good planning now will ensure you stay in control as the inevitable increase in expenses takes hold. And this might be coupled with an adjustment to your existing work commitments for you or your partner.

The change in lifestyle brings with it hidden extra costs. For instance:

• Childcare or giving up work? This is a major decision. Not every parent has the option to give up work completely to look after a child. Do you have the option to work flexible hours? Do you get a child minder or nursery school place? Whatever decision you make is likely to result in reduced income or extra costs involved.
• Housing - you may have to move to a bigger house or build an extension or re-locate to be closer to child care facilities or extended family.
• Holidays - your holidays will soon coincide with school holiday periods where prices of holidays are typically at their peak.
• Transport - you may consider buying a larger car to better accommodate the children

Whatever your plans, here's the key topics we think are important to consider:

1. The question of work

If you're on maternity leave, you don't have to confirm that you'll be going back to your job. But if you plan to return to work early, you'll need to give three weeks notice. If you decide to resign, you'll need to give the amount of notice stated in your contract. Your feelings about whether or not to stay at home with your baby may change with the birth, so give yourself time to make this decision if you're uncertain. Don't make decisions too soon. Be cautious, however, if you choose to return to work full or part-time you'll need to weigh up loss of earnings against the costs of childcare and travel.

You may find this Government website useful www.dwp.gov.uk/lifeevent/famchild/.

2. Consider taking out life cover.

You might want to consider arranging life insurance. If you were to die, life insurance would mean your partner was not left struggling financially.

3. Make a will.

This allows you to decide exactly which people will inherit any money, property or other assets when you die. It also means you can appoint a guardian to look after your children.

You may find the Rights and Responsibilities section of this Government website useful www.direct.gov.uk/.

4. Consider sickness cover.

If you were to have an accident or become disabled or ill for a long time, would your family be able to manage? If not, think about buying accident or sickness cover so that you'd have a guaranteed income in the event of your being unable to work for the foreseeable future. This is especially important if you're self-employed. If you're employed check the terms of your contract.

5. Sort out housing costs.

You may want to increase or change your mortgage if you're thinking about moving now that your family's growing. itsMYmoney can help you tap into a vast range of loan offers. Simply apply online or call us on 0845 234 2002.

6. Plan for your children's future.

If your children go on to higher education, you're likely to need substantial funds to support them. It would be ideal if you could finish paying your mortgage at the time they go to college or university. Look into paying off your mortgage earlier than the full term - this could tie in with them leaving school.

7. Look ahead to retirement.

It may seem like a long way off but it's a priority to plan for a pension now. If you're working investigate your company's pension scheme. It may be worth joining, especially if you receive employer contributions. You may also be able to put in additional voluntary contributions (AVCs) to top it up.

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