A financial guide to starting a family 2018

Finding your feet as new parents

Whether you're simply planning ahead or already have a little one on the way, raising a family can mean big changes to your family finances.

We've put together some top tips to help you start planning for the patter of tiny toes.

Make a family budget

From buggies to babygrows, having an extra member of the family (no matter how small) means you'll need to set aside money in your budget to cover your changing outgoings.

Think about how much you'll need to set aside each month and whether you need to cut back on any luxuries. As a guide, new parents on average spend £586 a month on children under 5 1. 

Start saving early

It might be difficult to imagine now, but sooner than you think your little ones will be fleeing the nest – perhaps looking to go to university, get married or buy their own home.

If these are things you want to support, starting to save early on could leave you in a much better position to help out in future.  

Looking at long-term savings options, such as investing in stocks and shares could also help your savings grow more quickly than a typical savings account (though remember there's an added risk that investments could go down as well as up).

Benefits and tax allowances

Tax-free ISA allowance

Under current government regulation, you can benefit from a tax-free ISA allowance each year – allowing you to put aside savings without paying tax on the interest you earn.

You can also open and save into a cash ISA, an investment ISA or a combination of the two each tax year.

Child benefit

All families are entitled to a weekly child benefit payment of £20.30 a week for your first child (and £13.40 a week for all other children) 2. Only one parent can claim for child benefit and different rules apply if parents separate or join family units.

If your individual income is over £50,000 a year, you may have to pay what's called a High Income Child Benefit Tax Charge 3.

Protect your loved ones with life insurance

It may be difficult to think about, but if something were to happen to you or your partner, you'd want to know your family is protected financially. 

Life insurance can help protect things like mortgage payments should you pass away unexpectedly. Thinking about how much money your family would need to maintain their lifestyle if you weren't around can give you a good idea of how much life insurance cover you could need.