Eight money-saving tips for parents
With the cost of raising a child at more than £200,000, your family is probably one of your most expensive investments. Katy Ward explains how parents can keep their finances on track.
According to an annual survey for LV= insurance and investment group, the cost of raising a child from birth to the age of 21 is now more than £201,000 – £9,610 a year, £800 a month or £26 a day. For some of us, that’s more than our house!
If you are a parent, don’t panic. We’ve rounded up eight ways mums and dads can manage their money.
1. Consider life insurance
It’s crucial to think about life insurance now you have people who depend on your income. If you are the family breadwinner, your children’s financial futures could be devastated should something happen to you.
However, a payout from your life insurance policy could cover your children’s living expenses or pay off any outstanding mortgage debt. This would guarantee their home is secure.
Likewise, it’s a good idea for parents to consider taking out private medical and income protection insurance.
Before you commit yourself to an insurance policy, however, make sure you talk to an independent financial adviser.
2. Get everything you’re entitled to…
Under the government’s Child Trust Fund, all children receive £250 to be placed in a savings account, while those from lower income families may be eligible for an additional £250.
What’s more, all parents with children under 16 are eligible for child benefit – currently £20 a week for the oldest child and £13.20 for any others.
If you are a parent in a low income household, visit the Jobcentre Plus website to check if you are entitled to any other state benefits.
3. Start saving ASAP
Seeing your child receive his or her diploma will probably be one of the proudest days of your life but that education won’t come cheap.
If you can afford to, you might want to transfer a portion of your salary each month into a savings account which offers a high rate of interest. Alternatively, you could use your tax-free ISA allowance to set up a university fund.
It’s always a good idea to seek independent financial advice about your saving options.
4. Get your children off on the right foot
However tempted you might be to spoil your precious darlings, resist the urge!
If you teach your children good money management skills from an early age, they are likely to be more responsible with their finances when they grow up.
Rather than stashing their pocket money in piggy bank, you could encourage your children to set up a current account. Not only will this teach financial responsibility, this money will start accumulating interest.
If you’re worried your child will make irresponsible purchases, plenty of banks place safeguards on minors’ accounts. This means your child will need your approval before withdrawing a large amount.
5. Have fun without breaking the bank
As any parent will probably tell you, a run of the mill family day out can be extremely expensive. Say you go on a trip to a theme park during half term you’ll need to fork out for entry fees, petrol, souvenirs and food.
If your budget is tight, investigate cheap alternatives in your area. Are there any child-friendly museums that don’t charge an entry fee? The Museum of Childhood in London, for example, has UK’s national collection of toys and childhood-related objects. Better still, it’s free of charge!
Alternatively, you could make the most of those bikes that have been languishing in the shed and go for a family cycling trip.
6. Switch your gas and electricity supplier
Household bills rocket when you have a family – with children leaving lights on and games consoles draining electricity.
It therefore makes sense to shop around for a better deal from your utility supplier. Lots of companies only offer their best deals to attract new customers. This means you’re unlikely to get the most competitive tariff by sticking with your current supplier.
One of the easiest ways to shop around for a more competitive deal is with an online price comparison site.
7. Don’t be a hand-me-down snob
You might think your baby deserves the best money can buy. However, buying new toys, prams and clothes can be more expensive you realise.
In fact, the LV= study estimates that parents spend £9,152 in the first year of their child’s life.
If friends and family offer you things they no longer need, think twice before you turn them down. Often new parents receive so many gifts some of these items go unused.
8. Make a will
It’s a sensible for anyone to make a will but it’s even more important for those with children.
By making a will you can make your wishes known about how your estate will be divided after your death and name the people you would like to act as your children’s guardians.
Remember if you don’t leave a will, the government will make these decisions for you – which could place your loved ones’ futures in jeopardy.
**Articles featured on BeatThatQuote.com are for information purposes only and reflect the views of individual writers. Articles are not, and should not be considered as, financial advice. BeatThatQuote.com strongly encourages our readers not to rely solely on information contained within this article/our website, but to conduct their own research and seek independent advice about the financial products they purchase.**
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