Motherhood is an exciting and daunting time, so putting measures in place for financial security before the baby arrives can provide essential peace of mind.
Maternity and paternity pay
To claim statutory maternity or paternity pay, employees need to have been in work for at least 26 weeks by the time the baby arrives and earn over £95 a week. Companies are only required to pay 90% of average weekly earnings for the first six weeks, then 33 weeks at £123 a week or 90% of weekly wages. Those who are self-employed are entitled to a government allowance. Maternity policies vary between companies, so it is always advisable to check employment contracts or speak to the HR department.
2. Making a will
Making a will is a very important consideration, particularly for those who are not married. Having a will ensures a person’s life insurance, death in service benefit and share of the house will go to their partner if they die. It is easy to do, costs around £150 and provides important financial security.
3. Life and critical illness cover
The value of a stay-at-home parent is often overlooked, but should something happen to them, alternative care would be needed. Childcare is estimated to cost around £25,000 per year per child. Nowadays, back office systems for IFAs mean they are well positioned to identify the appropriate products.
4. Keeping track of your pension
It is not unusual for people to have more than one pension and desire consolidation. High-earning individuals nearing their annual allowance can also pay into a pension on their partner’s behalf. Many IFAs contact Intelliflo for back office systems in order to ensure they adhere to regulatory requirements when providing financial advice.
5. Planning to live on one salary
Things change after having a baby, and many people don’t want to return to work after parental leave. Childcare costs are often too high or an employer makes returning to work difficult. It is always advisable to understand employment rights, but it is also worth making arrangements, where possible, to live on one salary for at least a short period of time.
Conserving money is sensible in the long-term; children cost money and earning potential is likely to decrease for a period of time. It’s worth considering spending less on high-end items and saving the difference for the future.