Life will never be the same again – and neither will your finances!
It is never too early to start thinking about your changing outgoings – raising a family can mean big changes to your family budget- new parents spend £586 a month on children under 5*.
But even before baby arrives there are certain things you should do to make sure your money stays on track.
The first thing to do is sit down and plan out your monthly budget for after your baby’s birth. Calculating your current and projected budget for when your baby arrives also means considering your needs, wants and desires for the first few years of your baby’s life.
Create a ‘baby fund’ to purchase baby essentials and subsidize lost income. Set aside an amount equivalent to approximately 3 months income to cover ‘rainy days’ and unexpected issues.
When baby arrives, don’t lose out on your entitlement- claim your weekly child benefit. payment. Currently, the payment is £20.30 for your first child and £13.40 a week for all other children.
Get yourself some life insurance- as a guide a minimum of 3 times your annual salary depending on your circumstances to cover expenses for baby in the event of your death. Even if you’re not providing a lot of income—or you’re planning to stay at home with the baby—you should still be insured as childcare would have to be provided in the event of your death.
Make a will. Choose someone to be your child’s guardian if anything should happen to both you and your partner. Bear in mind that the responsibilities of caring for your child can be split between a few different people. Choose one set of people to actually care for your child, and another to care for their finances in the event of your death.
Think long term and start saving early to leave you in a better position to support your child in the future – for university, weddings or to help them buy their first home. Look at long term saving options and take advantage of tax-free ISA allowances each year that is available under current legislation so you don’t pay tax on the interest earned.
Need help in planning your finances or making a Will?
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* Source: Aviva Website
The value of your investment can go down as well as up and you may not get back the full amount invested.
Will Creation provides a Will writing service. The Financial Conduct Authority does not regulate Wills.