Make a financial plan for your family

Ricky Banham

Starting a family is undeniably, a life changing event. Every aspect of life will change, as you know it, and this means that your financial priorities will too. Children have a unique way of draining your energy, and indeed, your finances. Luckily, there are ways to plan for this.

Build on your emergency savings

We usually recommend that people maintain between three and six months’ worth of living expenses in an accessible account. If you are somewhat behind with this, there is still time to build, or start, with this financial objective. Do not be discouraged if you cannot save more than a few pounds a week. An extra £250.00 over the course of the year will help. Even if that means sacrificing that morning coffee, or lunchtime meal deal! Remember, the more you have in your emergency savings, the greater protection your family will have from the unexpected.

Reassessing your budget

Did you have a financial budget in place before your new arrival? If you did, that is a good start. Now you have another mouth to feed, those numbers are likely to change. You need to consider the cost of childcare (one of the major causes of financial stress for new parents), clothing, and food. Once you have a feel for how much you are likely to spend, it would be a good idea to capture your outgoings. This can be used to accurately document your expenses, and help you identify any cost-saving opportunities, or financial planning areas that will provide you and your family, with some financial protection.

Identifying financial goals

You need to identify what your financial goals are, as you will be more likely to make steady progress towards achieving them if these are formalised. You could automate payments for savings accounts, or clear short-term debt, such as personal loans/credit cards. By automating your savings, or debt, you are prioritising these goals, and your other financial commitments will work around these. This will help you with your budgeting. We encourage our clients to be financial role models for their children, as this is not part of their current schooling.

Income Protection

Have you considered how your financial position would be affected should you be unable to work due to injury or illness? Income Protection is an insurance policy that is there to support you. It pays a proportion of your lost earnings so you can concentrate on regaining your health. Income Protection affords you peace of mind in knowing that your bills could be covered should the worst happen.

Junior Individual Savings Account (JISA)

Another consideration could be investing for your children’s future using a Junior ISA. A child’s parent or guardian must open the Junior ISA account on their behalf. Savings inside the account belong to the child; however, the funds held inside the account cannot be accessed until the child turns 18. Income or investment returns generated by a Junior ISA do not count towards a child’s tax allowance – effectively, any income or capital gains are free of tax. The current JISA allowance for the 2019/20 tax year is £4,368, and this can be split between cash and stocks & shares. Another advantage of the Junior ISA is that other family members of friends can contribute into it.



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