We all want to provide for our family and lay the foundations that will ensure our children are financially secure in the future. Family financial planning enables us to do this. By making the right preparations now, we can make sure our children benefit both in their early years and as they enter adulthood.
There is no set blueprint for managing family finances, however. The shape of the average family has shifted in recent times, with the 2.4 children norm no longer as common as it was. Many people are choosing to get married later and have children at an older age. No two families are the same and, as a result, no two family financial plans should be the same.
It is therefore Important you seek advice to help you develop a bespoke financial plan tailored to your family's unique wants and needs.
Starting a family
Deciding to start a family is a choice that will change your lives forever. It may sound obvious, but having a baby will considerably impact your finances, both in the short and long term. This starts almost immediately, with the potential loss of income through taking time off work coupled with an increase in expenditure as you prepare for the new arrival. You will need to work out a budget for your baby things, as well as calculate how much maternity and paternity pay you are entitled to.
As your baby begins to grow and you return to work, you will need to start thinking about different expenses. On top of the continuing need for new clothes and food (they grow up fast!) you may also have to consider your childcare options and the impact this will have on your finances. Childcare can be very expensive, so you will likely have to spend time researching the best options for you and whether or not you want to return to work on a full-time basis.
Setting goals for the whole family
Before you start a family, it is likely - and highly recommended - that you have given plenty of thought to your own financial future, as well as that of your partner. After you have started a family, you will have to add new ingredients into the mix. No longer do you only need to think about your own future, but also that of your children.
This may seem daunting at first, but with the right preparation you can make sure everything is in place to ensure a smooth ride. You can do this by creating a financial plan that sets goals for the whole family. By working towards these goals, you can ensure nothing is missed and that everything that needs to be done is not only being done, but being done at the right time.
These goals may mean trying to save a certain amount for a certain child for a certain time or, if they are being given or earning their own money, can mean them having their own savings targets. While the former will help to make sure you're financially prepared for certain events, such as attending university or paying for a wedding, the latter will instil in your children strong savings habits that will stand them in good stead for the future.
In order to put the right plans in place for future generations, intergenerational planning is key. It should form part of any sound financial plan for those with children, especially as many parents will decide at one time or other to offer gifts to their children. While this is a great gesture, it is important to realise the rules surrounding this, and how even a little financial planning can help you avoid the various associated pitfalls.
In order to be exempt from inheritance tax, there are limits to the amounts that can be given as gifts each year. This will affect when and how you would like to give these gifts, while there are also caps on the amounts you can give for certain life events that are exempt from inheritance tax, such as weddings.
Another important matter is your property. There are various options open to you to ensure the house or houses you have worked so hard for can benefit your children. This might include transferring the property into your children's name and paying the rent, or gifting to your children the proceeds of any sale.
By speaking to the experts, you can work out the right solution for you. Find out more about how best to look after your family's long-term interests by heading over to our intergenerational planning section.
To find out more about your options, speak to the experts at Equilibrium today. We are here to provide the guidance you need to make the right decisions and make sure you are caring for your loved ones as best you can. Call us on 0808 156 1176 or complete our online enquiry form for us to give you a call back.