How Do You Save For A Family?July 23, 2019
With everything going on nowadays, bills seemingly coming out of nowhere in the middle of the month, the hidden costs of the tiniest things adding up here & here and just planning out finances for the month, it can be a headache and a half trying to save for your family.
If you’ve recently been circling the idea of looking for ways to start saving on any amount, you might like this short post. I’ve had a look myself for some of the ways families here in the UK can start saving for kids. As long as don’t rush into things, you might be surprised by what’s out there.
Protect the entire family first
It’s not a nice thing to discuss upfront, but it is vital for parents to have life insurance to protect their families. In the unfortunate incident that a family loses a parent, if there isn’t a safety net in place for income protection, families will struggle all because a parent was either blind to or ignorant of getting life insurance sorted.
You’ll have to look into things like getting a fixed payment or pay-out on death as percentages vary between providers, as well as commission rates.
I would suggest using a comparison site as it’s the fees that can quiet ramp up over the years if you can keep paying in at the same rate, or your provider subtlety changes things.
Get tax free childcare
This is something the government launched in 2017 that is dramatically underclaimed by families – less than half are getting it.
The Government is guaranteeing that families can get up to £2000 a year tax-free childcare by opening a specific account for childcare that they will pay 20% on top of, up to £2000. By putting money solely for childcare in this account, they will regularly top-up credit in it (e.g. you put £50 in first thing in the morning, they add £10 the next day).
The caveat to this is that each country in the UK already provides free childcare for parents, with limits in each area you might not know about:
- England gives parents 15 hours free, and you need to apply for another 15 free
- Scotland gives parents 16 hours a week for 3 and 4-year olds
- Wales gives parents 10 hours a week (30 if combined with education)
- Northern Ireland gives parents a maximum of 22.5 hours, but that encompasses nursery school and after-hours care that you have to be eligible for
You can apply on the official GOV.UK site.
Take those tax savings and pop it in an ISA
You can double down on tax-free savings by investing those savings in a Junior ISA for a child.
Junior ISAs have a tax-free allowance that goes up every year. Last year it was £4,368 per child that you could pop in an ISA and know it will be safe until that child turns 18.
Different companies all offer varying incentives to get you signed up for an ISA, so take as much time as possible to look into what other parents think.
For example, these Scottish Friendly reviews on Trustpilot are from parents have used taken out a Junior ISA, saving you from stepping into the unknown.
And make sure you’re getting all your benefits
A lack of insight in knowing what parents can claim is a big bug bearer for me. It annoys me that parents aren’t clearly shown where they could be saving money while raising a child because no one tells them “oh look, you should be getting benefits for x,y,z”.
Benefits you could be missing out on that can help save money include:
- Child benefit
- Child tax credits
- Maternity and Paternity pay
- Adoption pay
- Maternity grant and allowance
- Widowed parent’s allowance (again, get life insurance sorted)
As with all money problems in life, Money Saving Expert has a handy calculator to help parents who don’t have time, which you can have a go with here.
Finally, look at doing some shuffling
It’s amazing what savings there are to about when you see what can be shuffled around, or what could happen if you switch a provider for all sorts.
Read my recent post on saving money on your mortgage to see how home costs can be bought down, and read this older post I still swear by on how to change spending habits so your family can save money.