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How to effectively re-budget for your new lifestyle with a family.
Welcoming a new addition to the family is always a happy occasion, but it’s worth thinking about more practical matters from the outset. The Child Poverty Action Group (CPAG) estimates that it costs more than £150,000 to raise a child to the age of 18, so financial preparation is an absolute must for parents.
Fortunately, there are many simple steps you can take to secure a better financial future for yourself and your family. Here are three essential tips that could help you to juggle the costs of becoming a parent. Consumer finance expert Paul Wilson (pictured below) from Financial Conduct Authority authorised credit broker Little-Loans.com explains.
It really is worth accepting any help you can get. Parents in the UK are often eligible for a range of benefits that can ease the financial burden of having children, with many support schemes open to all families regardless of their income.
Recipients of benefits may qualify for the Sure Start Maternity Grant if they are expecting their first child, or if they’re expecting a multiple birth (twins, or more!). This scheme provides a one-off payment of £500 that can help to cover the costs of a new arrival.
You may also be entitled to Child Benefit. This monthly payment works out to £21.15 per week for a first child, and £14 per week for each additional sibling. There’s no limit to the number of children you can claim for and you’ll only need to consider the tax implications if you or your partner have an annual income of over £50,000.
Childcare is expensive whichever way you look at it. Despite this, there are many things you can do to limit the total value of this essential expenditure.
To begin with, it’s worth investigating whether you are getting all of the tax credits you’re entitled to. All three and four-year-olds in the UK are entitled to at least 10 hours of free early education for 38 weeks of the year.
The Government also runs a tax-free scheme which offers up to £500 every three months for each child to cover the costs of childcare. This tax-efficient approach to funding childcare means that the Government will pay £2 towards these costs for every £8 you pay.
Everyone wants to save for their children, but knowing how is another question entirely. There are two primary types of children’s savings accounts – instant access (or easy access) and regular savings. Instant access accounts generally offer a lower rate of interest whilst allowing you and your children to use the cash whenever it’s needed. Regular savings accounts, on the other hand, offer a higher rate of interest whilst tying the money in for a set period of time.
It’s important to choose the account that best reflects your needs and those of your family, but a regular savings account is usually a better option if you can afford to stow your savings away for a while.
It’s difficult to manage your money at the best of times, but children bring with them a whole host of additional costs to think about. So long as you can carefully balance your budget and make smart choices, you’ll be able to secure a better financial future for yourself and your family.