Starting a family: Making way for your new arrival
Ask any parent and they’ll tell you that nothing changes your life in the same way as the arrival of your first child. It’s a truly special time, and you’ll get a great deal of pleasure from each new purchase as you plan for your baby’s arrival. But you’ll hardly need telling that it won’t be cheap.
From doing up the nursery, to buying a pram, car seat, clothes and toys, the costs can really add up and it's all too easy to spend thousands of pounds even before a baby's first birthday.
Financial support for parents
But with some careful planning parenthood needn’t be a constant financial struggle. And you’re also likely to benefit from some financial support from the Government and elsewhere. This could include:
How you could benefit
Available for each of your children under 16 years old, or 20 if they stay in full-time education. The amount for an eldest or only child is £21.05 a week, and you could be paid £13.95 for any additional children. To find out more please visit the Gov.uk website.
Child tax credit
Available for children under 16, and those under aged 20 if they are in eligible education or training. Your eligibility depends on how much you earn and your circumstances. To find out more please visit the Gov.uk website.
Some employers will offer you the option of putting aside a set amount of money from your pay each month to go towards childcare costs. The advantage of this is that you won’t have to pay income tax or National Insurance contributions on this amount.
Help from your family
Many parents save on the considerable cost of childcare by receiving help from family members. You may even have someone who might want to bring forward their retirement to do this.
Some of your savings and investment options
No matter what kind of support you’re expecting to receive, it’s a good idea to start saving for your new arrival as soon as you can, so you can enjoy the special moments rather than worrying about your finances.
Think about when you’re planning to start a family. This will be one of the considerations which will help you decide the type of savings or investment plan that will best suit your needs.
Savings and investment options include:
If you’re planning on a new arrival in the next couple of years, you may wish to consider using a cash ISA to save a regular amount without paying tax on the interest you’ll earn. You’ll normally be able to access your money without giving notice. You should be aware that inflation will reduce the buying power of your money, particularly if the interest rate is less than the rate of inflation.
Stocks and shares ISA
Maybe you’re thinking further ahead and wish to invest in the stock market. If so, you may wish to consider investing in a stocks and shares ISA, you should look to invest in a S&S ISA for 5 years or more. You’ll need to carefully consider the risks and benefits. As your money is invested in the stock market it can go down as well as up in value and there is a risk you could get back less than you invested.
Thinking further ahead
You’ll be well aware that prams, nappies and car seats are only the start of it! Much has been said and written about the cost of raising a child.
If you want to help them out, it’s never too early to think about putting some money aside for their financial future, whether it ends up being used for university fees, or putting down a deposit for their first home.
To make this easier, the Government has introduced a Junior ISA (JISA) so you can save and invest tax efficiently on their behalf. For more information see gov.uk
A final thought, this time about your own future...
To help ensure your own future is as secure as you’d want it to be, it’s worth regularly reviewing your saving and pension arrangements and your plans for the future. We all want a good retirement, but why not aim for a great one.