How mums and dads can claim a better deal

Have you got £47,000 in spare cash? If not, consider your approach to family planning carefully - this is the total cost of bringing a child up to the age of five, according to research from friendly society Liverpool Victoria.

The good news, of course, is that you don't have to shell out the whole cost in one payment. And not only are there ways to cut the cost of childcare but prospective parents also have legally enshrined rights to a range of benefits.

In fact, these have just been improved. While new age discrimination laws, introduced last Sunday, made all the headlines, reforms of the rules on maternity benefit, which came into force at the same time, have been less well-publicised.

The most significant reform is that women are now entitled to nine months of paid maternity leave, up from six previously. This applies with any baby due after 1 April next year, even if the baby actually arrives early.

What the new rules mean in practice is that pregnant women will be able to take nine months off work and be paid for the whole period. But that doesn't mean full pay. What they'll actually get is Statutory Maternity Pay (SMP). SMP - paid by your employer and then reclaimed from the Government - is worth 90 per cent of your pay for the first six weeks of your maternity and then £106 a week thereafter.

Some employers are more generous than this, but this is the minimum you should receive. You are also entitled to take a further three months of maternity leave, though you won't receive SMP for this period and your employer is under no obligation to pay you.

The extra three months of SMP will be worth at least £1,370 to mothers who take it - more if your employer is more generous - and they do not affect your rights when you return to work. In addition, if you are a member of an occupational pension scheme, your employer must maintain its contributions on your behalf for the whole period during which you receive SMP.

Another change, which the Government reckons could help 20,000 women a year, is that there will no longer be a minimum employment requirement for claiming maternity rights.

Until now, women have only automatically qualified for full maternity rights if they have worked for an employer for 26 weeks by the 14th week of their pregnancy. From 1 October, however, the only requirement is that expectant mothers must have worked for an employer before they became pregnant, even it was only for a matter of days.

One final change affects women after giving birth. If you want to - and your employer agrees - you can work up to 10 "keeping in touch" days before officially returning to work, without affecting your SMP or maternity leave rights. How much you are paid for these days depends on what you can negotiate with your employer.

It's important to note that the new maternity rules do affect two other important time-related issues. First, your employer is only required to keep your job open for six months. If you take longer off, you are still entitled to return to work, but you will have to accept a suitable alternative job. Similarly, your employer only has to continue offering most employee benefits - gym membership, say - for 26 weeks.

Prospective fathers, on the other hand, have missed out under these latest reforms. The Government had intended to allow fathers to take up to three months of their partners' maternity leave as unpaid paternity leave. So, for example, husbands whose wives take six months off work, would be entitled to three months' of paternity leave.

However, a spokesman for the Department of Trade & Industry says this change won't now be introduced until the Government extends paid maternity leave to a full year, which it has promised to do before the end of the current Parliament.

In the meantime, prospective dads are entitled to two weeks' paternity leave, as long as they have been employed for 26 weeks by the 14th week of their partners' pregnancies. Employers only have to offer statutory paternity pay - paid at the same weekly rate as SMP - but many are more generous.

Still, there are other ways to save money when the baby arrives. David Newman, director of marketing at Co-Operative Insurance has launched a money-saving guide for expectant parents.

"The emotional and physical strain of starting a family is stressful enough for most people," Newman says. "Added to that, the financial strain and the whole experience can become quite daunting."

Co-Operative Insurance says that new parents should collect vouchers. Retailers such as Boots run baby clubs. The idea is to collect points from purchases which can then be redeemed in store. These companies have different incentives throughout the year with a lot of free offers and money-off vouchers, the value of which can soon add up.

Parents could save around £30 on an evening out by getting together with friends who also have young children and exchanging babysitting favours. Another tip is to use real nappies. Reusable nappies are no longer difficult to wash or uncomfortable for babies, plus they're better for the environment. Disposables cost around £920 over two and a half years while reusables come in at £200.

And new parents should make their own purees. Once your baby makes it on to solids, the cost of jars of baby food can soon add up. Your own purees made from fruits, vegetables and even family meals will be cheaper.

While parents naturally want all the latest equipment, a lot of things, from baby monitors to toys are just as good second-hand. Check out the internet or visit jumble sales run by organisations such as the National Childbirth Trust.

It also makes sense to sell second-hand. EBay can help you clear out your wardrobe once the baby arrives. Most maternity wear is good as new.

You can take the same approach with some baby equipment and toys, once your child has outgrown them.

'I didn't even consider cash savings for my two boys'

Despite early scepticism about child trust funds, the Government scheme that offers savings vouchers worth at least £250 to every new-born child, the concept is catching on. A Government audit published last week showed that in the first year of its operation three in four parents eventually opened an account.

However, with around 80 banks, building societies, life insurers and friendly societies offering three different types of child trust funds, there has been confusion.

By far the most popular option is a stakeholder account. With these plans, the child's starting £250, plus any subsequent contributions made - the maximum is £1,200 a year - are invested on the stock market for the first 13 years.

Usually, the stock market investment is in an index-tracking fund, a cheap vehicle that follows the market up and down. From ages 13 to 18, when the child trust fund matures, 20 per cent of the money is moved into lower risk assets each year, to reduce the impact of market crashes.

The two alternatives are cash child trust funds - where the money is held in a tax-free bank or building society account - and pure stock market funds - where there is no automatic re-allocation.

"The cash option is only appropriate for people who really cannot stomach the idea of the stock market," says Anna Bowes of financial adviser Chase de Vere. "You'll get a substantially better - though not guaranteed - return from the stock market ."

Most of the stakeholder plans on offer are similar, because fees are capped and they all track the UK market. But Bowes likes a variation on the theme, from Family Investments, because it gives exposure to actively-managed funds run by top-performing manager New Star.

This is the account that Lisa Atkins (above) opened last year for her two-year old son Elliot.

"My eldest, Charlie, missed out on child trust funds but I had opened a separate stock market plan with Family for him," says Lisa. "I didn't even consider cash savings for the boys because I was confident that over 18 years, the stock market would be a better bet."

Amongst the pure stock market child trust funds, Bowes recommends The Children's Mutual. "It offers the most choice, with different funds on offer from three separate managers - I particularly like the Invesco Perpetual range, or Gartmore's Cautious Managed fund."

If you do want a cash child trust fund, the best current rates are from Yorkshire and Britannia building societies, which pay 6.25 per cent a year.

Finally, remember that all money in a child trust fund must be handed over to the child at age 18. For this reason, many parents choose to do most of their saving for children using other arrangements, so that they will have more control of the money in the future.