Financial Planning for a Family
At MyBump2Baby, we want to support parents across the country with their financial planning for a family. Growing your family can be hard enough without having to search for extra information, that’s why we thought we’d make life easier and put it all in one place for you. We do recommend financial planning during pregnancy, however it is never too soon to start financial planning both personally and for your family.
Financial planning is not an easy thing to do, especially when a lot of us don’t like to talk about money. We think it’s so important to have these conversations and protect both yourself and your family, because you never know when your planning might come in useful.
Financial Planning for Young Families
Currently, Covid-19 has affected the world a lot, one thing that has been heavily affected is employment. A lot of people have had to face redundancies and with more companies struggling to carry on, there are less jobs available. Whether you have a family or not, it’s an incredibly stressful time for everyone involved. When you are struggling financially, it can feel as if you are never going to recover from the situation, but there is help available should you find yourself suffering.
Financial planning means that you would potentially have some money set aside for dealing with emergencies such as redundancy or even loss of earnings, which many others have had to deal with. It can be hard to set aside money each month and yes, life can still throw curveballs at you when you don’t expect them, so you need to try and be prepared for all eventualities.
Financial Planning when Starting a Family
Growing your family is such a lovely time in life, it’s exciting and it definitely brings people closer together, but as any parents will admit, it is not cheap. That’s why you should try to start planning financially for starting your family as soon as you can.
Before you start planning, you’ll need to have considered when you will be returning to work. You don’t need to be 100% sure but you need a good idea so that you can plan ahead for any loss of earnings that you may experience. You will also have to try to find out exactly what you are entitled to from your job or from government schemes.
Next, it’ll be time to start looking into how much baby products will cost you. If this is your first child, you may end up spending more than you would if it was your second. This is because it’s unlikely that you’ll have secondhand clothing or furniture that can be reused. Some products such as prams, car seats, cribs and highchairs can be expensive, however they generally last, so you don’t have to keep paying out large sums of money. You should check the specifications on your car seats and prams to ensure that they will last your child based on height and weight.
Other expenses will include clothing, nappies and wipes, which you will probably go through very quickly. Shop around for the best prices on products such as nappies, ensure that they are high quality and suitable for your baby’s skin (obviously you won’t know that until they arrive). Some supermarkets may offer vouchers for certain products to encourage you to buy them again in the future.
It’s a good idea to create a spreadsheet of products and their prices, so you can see clearly how much everything is. After this, you can workout how much these products will cost you over a period of time, such as per month or whatever time frame works best for you. If you consider these prices over time, you can work out exactly how much of your earnings will be used to support your family.
Personal and Family Financial Planning
Dealing with your personal and family expenses can be a very different experience. Personal expenses may include treating yourself to a new perfume every month or going out for a coffee with you friends. Whereas family expenses will be things like your baby’s nappies or bottles.
For a lot of parents, personal expenses will be reduced after you have a baby, because you might not have as much time spare and your family’s needs will have to come before your own. There are definitely ways that you can still treat yourself regularly, just not as much. To do this, you can start putting a small amount of money away each month and perhaps save up to buy something in the long run. For your family expenses, you don’t have to spend loads of money on new products for your baby. Simple is so effective. Your baby won’t be bothered if their pram doesn’t match their changing bag.
No matter how old you are, financial planning for your family leads to a happy future. Having money set aside specifically for various things such as holidays means that it’s clear how much money you can spend to have a good time. Should anything tragic happen to your family, knowing that there is money aside to protect your loved ones is really great.
Starting a family as young parents can be really difficult, often younger people have not had time to save up lots of money so they haven’t done any financial planning. There is plenty of advice and help available for young parents to consider and we would urge everyone to look into how government schemes can benefit you, do not suffer alone.
Private pensions
While it’s always useful to be paying into a pension with your employer paying in too, it’s also very useful to have your own private pension. Pensions are used by individuals to ensure that they have savings when it comes to later in life, after retirement. It is really important to ensure that you ask the company that you are setting your pension up with about their management fee, as this is the amount of money that will be automatically deducted from your pension pot. At the moment, 25% of your pension will be tax free.
Wills
A will is a legal document that you can prepare at any age, it states where you would like your property to go. It is really important to make a will, if you don’t, your family may end up losing out on possessions of yours that might mean a lot to them. If you are not married to your partner and you do not have a will, if something happened to you, you could end up leaving your partner and family in financial trouble because you haven’t expressed where you’d like things to go. In some cases, people may choose to recieve help from a solicitor about their will, this is not compulsory but can help to avoid any confusion and ensure that everything is taken care of. Within your will, you must state your possessions and property and who you want to receive them (your beneficiaries), if you have children under 18, you must state who will care for them and you must choose someone to organise all of these arrangements.
Life insurance
Life insurance is often not considered for a lot of adults, but it really is a good idea. Essentially, if your family and partner depend on you financially, you should invest in some life insurance. Unfortunately for some families, tragedies can happen, having life insurance means that your family can still be supported in the event of death. There are also options to have your funeral expenses included within your life insurance policy, as these costs can often set families back financially.
Life insurance can cost different amounts based on various things, such as your age, your health, lifestyle, whether you smoke and the length of the policy. You should complete in depth research before you take out your policy.
Critical illness cover
Critical illness cover is useful if you develop an illness listed within your policy within your lifetime. The company that your policy is with will issue you a one off payment which can be used to pay for your mortgage or any home improvements that are necessary due to your illness. Critical illness cover is designed to take the pressure off you and your family financially, in the event of illnesses such as heart attack, stroke, some stages of cancer, or conditions such as multiple sclerosis. It is important to note that once you have claimed for your critical illness, the policy ends.
How can we Help?
At MyBump2Baby, we work with many family financial advisors across the UK. Each advisor works tirelessly to ensure that they have offered the highest quality advice to their clients. Their job as a financial advisor is to help you plan ahead with your money and organise it efficiently. Supporting your family financially is really important and it means that you can prepare for anything that may occur. Find your local financial advisor.
We hope that this article has been helpful and feel honoured that we can offer support to families across the country through our directory of trusted financial advisors.
If you would like to speak to your local financial advisor, why not check out our directory?
Hi, I'm Emma and I'm MyBump2aby's family law, protection and financial editor. I'm passionate about better-informing parents on their choices when it comes to family law and family protection and financial matters.
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