Home vs Baby: Can You Afford Both?

January 16, 2015 Updated: April 23, 2016

Balancing your budget comes into sharp focus when there’s baby talk or you start thinking about buying a home. The issue is particularly complicated if you happen to be your own boss – even tougher if you AND your partner are self-employed, AND both milestones are on the horizon.

An estimated 15 per cent of the UK workforce now self-employed, working as career freelancers and highly-paid professional contractors or self-employed seasonal workers or low-income sole-traders making ends meet – so you’re not alone. Could you afford to meet your mortgage repayments, or pay rent, and support a family if your business failed? Are there maternity and paternity benefits for new parents who work for themselves? For information, visit www.moneyadviceservice.org.uk.  

Budget for confidence 

Long-term self-employment demands strict budgeting and a realistic grasp on what it takes to make ends meet, especially when the going gets tough. A mortgage taken out against your combined income history as a self-employed couple should have been based on affordable monthly repayments especially if your lender is following proper guidelines on affordable borrowing. If you are renting or repaying a mortgage, now’s the time to plan your expenditure using a baby costs calculator.  


Less maternity time

Mums who freelance and work independently could find themselves with less time to prepare for childbirth and focus on their newborn than other women, reports The Guardian. The level of state maternity pay available to self-employed mums could force you back to your home office, laptop and customers within weeks – as you get on with earning money to help cover the rent or the mortgage on your family home.

Maternity Allowance is payable to mums who have worked for 26 weeks of the 66 weeks leading up to the baby’s due date, and who earn more than £8,000 a year. 

Matthew Fryer, head of tax and compliance at accountancy firm Brookson, shared some practical advice for self-employed mums, in The Guardian: “Something you can do on maternity leave is keep the marketing and business development side of things ticking over, so when you’re ready to go back, you’re still out there in the market and you can find work. Don’t underestimate how long it can take to ramp the business back up again.”

No paternity leave or pay

Dads who are self-employed will get no support from the state when it comes to time-off and should save as much as possible in advance. Start saving as soon as you can, to help cover living costs when baby arrives. Your baby buffer will need to take into account any lost earnings, if you decide to stop working for a week or two to take some paternity leave.

Top up your income

New parents can look to top up their savings and income by applying for benefits – on top of stamping out all unnecessary spending with a tight budget.  There’s financial support available for new parents to help raise baby. Self-employed couples could look into making an application for Universal Credit or, in the interim, Working Tax Credit; Housing Benefit; Council Tax Support; Child Tax Credit and Child Benefit; Jobseeker’s Allowance; support with mortgage interest.

Also consider a Sure Start Maternity Grant, income support, or Employment and Support Allowance, depending on your circumstances.

Child benefits

Government benefits are on offer, to help new mums and dads get to grips with providing for their new family member. Child Benefit pays £20.50 per week for your eldest child and £13.55 for any further children. To apply for Child Benefit you can visit gov.uk here and download an application form for completion.