There’s a lot to think about when you’re expecting a new baby. Exciting preparations for your little one’s arrival, such as decorating the nursery, buying prams and other necessities, and selecting new clothes and toys, can make for a long to-do list. Amid this whirlwind of activity, financial planning can easily get forgotten. However, while it might not feel like the most interesting of tasks, it’s definitely one of the most vital and certainly should not be put off.
Assess your needs
Raising a child to the age of 18 is expensive and with young people now often living with their parents well into their 20s and even their 30s, it’s becoming an increasingly costly business. Take some time to consider what your outgoings will be, factoring in expenses such as childcare and school fees. You may also need to modify your plans to account for a reduced household income if, for example, one parent plans to be a stay-at-home parent.
Save, save and save some more
Before starting your family, it’s wise to open a savings account to accumulate the funds you’ll need to cover your initial expenditure and provide you with extra funds during the months following the birth, when new parents typically take a hit to their income. Making a concerted effort to pay off any existing debts will also help to take the strain off your finances once your baby has arrived and will save you money in the long run.
While it’s tempting to concentrate solely on raising funds to meet your short-term costs, there are a number of financial planning decisions you should also be considering that will make life easier in the long term. With a brand-new family member to look after, you may need to think about reviewing your protection policies, drafting a new Will, or opening a savings account (such as a Junior ISA) in your child’s name. You could even consider paying into a private pension on your child’s behalf, although they wouldn’t be able to access this until they are 55 under current legislation.
Here to guide you
Whether you’re considering parenthood or already have a new baby on the way, it’s a good time to take stock of your financial situation. We can review the current state of your finances and put plans in place that will help you towards a secure future for yourself and your growing family.
The value of your investments, and the income you receive from them, can go down as well as up, so you could get back less than you put in. A pension is a long-term investment and inflation will reduce how much your income is worth over the years. Tax advice with no investment element is not regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate Will Writing or taxation and trust advice