Starting a family is a big step. You need to ask yourself some important questions. What will it cost, and how can you be sure of having the money you need? Plus, as the coronavirus epidemic has shown you also need to ask how those questions would be answered if you were not there.
At Continuum we are taking a fresh look at family finances.
The cost of raising a child
Children are expensive. Food, daycare and babysitting, clothing, education, toys, the list goes on and on. Raising a child to the age of 18 can cost couples in the region of £151,000. With an average income of £511 per week, it means that more than a quarter of your income will go on your child.
It’s children aged between one and four who cost parents the most. During these pre-school years your child can cost hundreds of pounds each week, especially if you need to pay for childcare.
It is a major financial commitment, and one that most of us are happy to meet, even if it does mean going without luxuries like a new car each year and holidays to exotic places, or even a bigger home. But remember, you will still have a home to pay for, retirement to save for and financial protection, with life insurance and other policies, to arrange.
The simple fact is that having a family will complicate your finances. The good news is that at Continuum we can help you make the financial plans you need.
Getting your finances on a firm footing
The first step to providing for your family is to get your finances on a secure basis. Recognise what you need to pay out, and then work out how you will cover the costs. A carefully worked out budget is a good start. It will show you what you can afford, including the little extras, and staying within it is easier if you have things written down. You should be able to cover all those unavoidable costs from your income, and have some cash left over for your own future.
A member of the Continuum team can sit down with you, and discuss how you can use your remaining cash to start saving for the future. You need to start thinking about a personal pension even if you are still wondering how you will pay for the cost of a baby – because the sooner you start, the less your pension will cost you.
Our experts can show you how to make the most of your money, and even if things may be tight for a few years, how you can start looking forward to a more prosperous future by taking the right steps now.
The insurance protection you need
If you are in good health you may feel confident that you can provide for your family, even if the actual cost does come as a shock. But the sad fact is that none of us know what is around the corner.
So the next step is to ask yourself, if your monthly income was to stop coming in, how your family would replace it. Fortunately, there are life insurance products which can ensure that your loved ones can be looked after, whatever happens to you.
At minimum, your cover could ensure that the mortgage was paid off so your family could keep their home. But with a higher level of protection, you could replace your entire income.
There are also several types of life insurance, and if you are thinking about protecting a young family, the most appropriate life assurance may be Family Income Benefit. This pays out a tax-free income from death until the end of the policy term, often when your youngest reaches 18 or 21 years of age.
Get an expert on your side
Your family will mean financial sacrifices, but with the expert help of the Continuum team, those sacrifices may not be as great – or as long lasting – as you might first think.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of investments can fall as well as rise and you may get back less than you invested.
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