The cost of university or private school fees, plus any extracurricular activities, can add layers of financial strain to any marriage or partnership.
Adopting simple financial planning principles can help you to avoid the trigger points of financial strain in the future, allowing you as a parent to enjoy the milestones in your children’s lives – rather than causing worry or financial concern.
Below are five financial planning tactics to help you plan for your children’s future:
1. Map out all costs. Set a realistic figure for university or school fees, with an estimate for extracurricular activities such as music lessons or school trips. Plotting all of the large costs you will incur for your children will provide savings deadlines and a realistic view of the sums you need to achieve.
2. Discuss plans with relatives. If you set specific savings goals early on, relatives will have the opportunity to contribute. In many cases they might prefer to make a donation to your child’s university fund, rather than buying expensive gifts at birthdays and Christmas.
3. Consider investing rather than saving. If you have a new baby and want to save for their university fees consider using stocks and shares NISAs, rather than cash ones. If your money is not needed for more than five years in the future, returns from stock market linked investments can be higher than cash accounts and there is usually time for any rises or falls in markets to even out – hopefully providing greater returns.
4. Don’t look at saving for your children in isolation. Financial planning involves making decisions about what to do with your income now, so that it works better for you in the future. You need to consider the costs associated with your children as part of your overall plans, while not compromising other essentials such as life insurance or personal pension contributions.
5. Get advice from a professional. Speak with a Financial Planner; someone who can help you to manage your finances properly. A professional adviser can review your existing investments and pensions, and also help you to arrange savings plans such as NISA investments. They can also help grandparents or great grandparents to gift to your children and, as appropriate, mitigate inheritance tax while increasing the benefit of any gifts.
To speak to a PK Partnership Financial Planner about securing a better financial future for your children as part of your overall wealth plan, please get in touch.