The pitter patter of massive bills and nappies
Starting a family
One of the many great things about Britain is its diversity. And by this time, the circumstances of everyone in this age band will vary hugely. It was reported by the Office for National Statistics (ONS) in November 2020 that the average age of first-time mothers in England & Wales was 30.7 years in 2019 and, as you would expect, this SaidSo free guide follows this reality, although there is something for all.
Wanting to start a family is natural for some, impossible for others, adoption maybe challenging, unplanned for...well, we’ll move on, and invariably a family involves a lifetime of expense for all. You might have just struggled on to the property ladder, just got a pay rise or promotion or new job, with some welcome income increase secured, only to find that you’ve got just over half a year to have your money and home in order to welcome a new life into the world. Exciting and daunting all rolled into one hectic period of your life. Be ready!
You’ll be a bit savvier money-wise by now, understanding your way round your pay slip, and even your P60 each year, your mortgage, savings situation and how much cash is left for a bit of fun...or nappies now! That DIY will need to be finished, the sporty car will have to go, the latest pram is not cheap and is there a chance of one last holiday as a couple together before you become a family? You get the picture, but are you ready? If this is your first child then I am not sure anyone is truly ready and you’re going to need bags of energy.
But what should you be doing on the money front?
Make sure you don’t lose out on National Insurance contributions
It’s likely that one of you will be stopping work, at least for a while, to look after your imminent new arrival. A pause in employment can also mean that you’re not making any National Insurance contributions in that period of your life, and this will affect the benefits you may be entitled to in the future (e.g. State Pension and Jobseeker’s Allowance). Some allowances, such as Maternity Allowance or Child Benefit, should attract National Insurance credits automatically.
In other situations (e.g. if you are on Statutory Maternity, Paternity or Adoption Pay), you’ll need to apply for credits. You can check if you’re eligible here.
You can also check your National Insurance record here if you think you may have gaps in your contributions that need to be topped up.
Government allowances – what are you entitled to?
If you’re on a low income or maybe in between jobs at the moment, you may be entitled to financial support from the Government. There’s a list of the benefits that are currently offered in the UK here.
Child Benefit is one allowance that springs immediately to mind for your age group. You get Child Benefit if you are responsible for a child under 16 (or under 20 if they’re in approved education or training). You can claim this from the Child Benefit Office and there are instructions on how to do this here.
Keep in mind that you may have to pay a tax charge if you or your partner’s individual income is over £50,000 pa gross.
There’s a useful calculator here which should help you work out how much Child Benefit you could receive in a tax year and any tax charge that you or your partner might have to pay.
If either you or your partner has an income of over £60,000 gross a year, you’ll have to repay all your Child Benefit, if claimed, as income tax. You can choose not to get Child Benefit payments if this is the case, but you should still fill in the claim form because it will help you get National Insurance credits.
If you’re on a fairly low income, have a look to see if you qualify for Working Tax Credit. There’s an overview of this benefit here, along with details of who’s eligible and how to claim.
There’s also Child Tax Credit available – and you don’t need to be working to claim this. Eligibility depends on the child’s age and whether you’re responsible for the child – find out if you qualify here.
Savings for children
One day – yes, really! – your little one will be heading off to university, an apprenticeship, their first job... and they’re going to need some cash to fund their future. If you start saving early, the drain on the ‘bank of Mum and Dad’ could be a bit less painful. It’s good to use the tax-efficient Junior ISA allowance every year, which is £9,000 in the current tax year (2020/2021). Anyone can pay into a Junior ISA (especially grandparents!) so it’s a great way for family and friends to give money to your child. More info here.
Is your family protected?
If you haven’t yet put anything in place, check what protection you’ve got from your employer, both in the scenario of death or ill health. It’s important to ensure that any debt, such as the mortgage, can be repaid if you die and still leave some cash for your partner and children, or future children, to allow them to make ends meet thereafter, especially if you are the main income earner.
The cost of life cover for non-smokers is relatively cheap at this age, so it’s well worth a review to see what you need. If you’re leaving work permanently to bring up a family, SaidSo can look at replacing protection cover lost if your employer provided this, like death-in-service cover. Have a look at your Employment Handbook (if there is one) or your employment contract to see what’s what.
Also check the ill health position with your employer if you are unable to work. How long will your pay continue?
There are various covers available and some life cover arrangements include Critical Illness Protection. This can pay out a lump sum on diagnosis of a serious condition, but check the plan benefits to make sure it meets your requirements.
Other protection plans might include income replacement as the benefit. Standard Statutory Sick Pay is not high, so make sure you have enough cover to protect the family in the event of accident or illness.
The SaidSo team is well aware that there’s a lot going on in your life at the moment. If two is soon to become three, make sure you take time out to enjoy yourselves now.
It won’t be long before you can’t go anywhere without lugging half the contents of your house with you to keep the little one happy, so if you’ve got travel or luxury hotel ambitions, now’s the time!
We hope you have been inspired to take action for your financial planning from the notes above. This SaidSo free guide is for guidance only.