Parents can often find their time entirely taken up with looking after the newest member of their family. It’s a life changing experience that will have an impact on their finances too.
For any couple, one of the biggest adjustments is managing on one salary, so working out a budget together will ensure that they have taken care of the monthly overheads. As well as statutory maternity pay or maternity allowance, you may be entitled to other things like tax credits or child benefits, free NHS prescriptions and dental care.
Protecting what’s important
Parents want to do what’s best for their children, but many overlook putting insurance plans in place in case anything should happen to either of them. It may be an uncomfortable topic to discuss, but nobody would want to leave their family struggling financially. The monthly cost of a protection plan is a lot less than many people imagine, often no more than a family might spend on a round of coffee and cake on the high street.
Saving for their future
A Junior ISA is a tax-free savings scheme that enables parents to put money aside either into a cash or a stocks and shares account for their child’s future. The allowance for the 2019-20 tax year has been increased to £4,368. On their 18th birthday, the child can access their savings. Those who want to plan even further ahead can open a pension for their child, saving up to £2,880 per year tax-free.
Tax relief on pension contributions at 25% means that the amount actually invested becomes 3,600. When the child reaches 18, they can continue to invest in it and access their pension at age 55.
It may be an uncomfortable topic to discuss, but nobody would want to leave their family struggling financially.