Financial Planning for Parents

When you become a parent, financial planning is not often top of the agenda. You probably have your hands full with feeding the baby, changing nappies, trying to get them to sleep, and generally just working out how to deal with what is likely to be the biggest 'game-changer' in your life so far!

Despite this, it's really important to put plans in place and to consider, from a financial point of view, what you need now, in the future, and also your new family's needs.

In this 2-min(ish) video, our founder Naz, a parent himself, goes through some of the most important things you may want to consider at this rewarding, but often financially challenging, stage of your life.

Video Transcript

Becoming a parent for the first time is a really big deal and I'm sure you have all sorts on your mind, but one of the things you really need to think about is the effect it has on your finances. So what sort of financial planning do you need to do when you first become a parent?

Well, for me, there's three main things you need to think about.

The first thing is protection.

A lot of people have mortgage protection, which allows them to pay off their mortgage should they die, or should they contract a critical illness, for example. But what about income protection?

This gives you a monthly benefit should you have an accident, an injury, or contract an illness and it's really important to have this in place because this could be the difference between being able to continue your lifestyle or continue paying for childcare or whatever it might be to allow you and your family to keep doing what you're doing. Even if one of you isn't working, its important to also protect them. If that person at home was providing the childcare but was no longer able to do it, then effect would that have? Would that mean that the person going out there and working has to earn more in order to pay for the childcare? Or could it mean that they need to go part-time, for example, or work less, in order to provide the childcare themselves? All these things have an effect.

The second thing is the effect it has on your own long-term planning. I understand in the first year or two that these things probably get put on the backburner, but it's important to pick back up your pension planning or your investment planning as soon as possible. Don't forget the children will grow up at some point and be independent so it's really important that you don't allow that to be put on the backburner for too long. Once they've grown up, you want to make sure that your pension plans are still in place and your investment plans are still in place.

The third thing is planning for the child themselves - whether that's setting up a Junior ISA for them, or whether it's setting up a savings plan to allow them to perhaps buy their first house, or held them through education, or it might be a first car, for example. 

So, with all these things in mind, it's really important to consider your financial planning when you become a parent. If you want to chat about any of these things further, please give me a call.