As a father of two young boys and an independent financial adviser with over 11 years experience, I feel I am well placed to advise on the main areas of financial planning that new families need to consider. There is nothing more compelling than the natural instinct of a parent to protect and provide for their family. The first step to ensure your family is financially secure is to become aware of the risks both you and your family are potentially exposed to. One of the greatest risks you may face is losing your ability to provide a secure and comfortable lifestyle and future for your family.

It is often simpler to consider your needs for today, but with a family you should also consider your needs for tomorrow. A family’s needs evolve over time, in the future you may want to provide a larger family home, family holidays, save for your children’s university fees and also ensure you have a steady flow of income. It’s worth taking a moment to consider what you would do if an accident, illness or even unthinkably, a death, stopped your ability to work and provide an income. This could have a devastating impact on your family’s financial security and long-term lifestyle choices.

I have found, in order to survive financially and to eliminate increased financial pressures (or, at least, to keep them to a minimum), it’s important that you make some financial plans for both now and the future.

For example, life assurance policies are crucial to ensure that your family will be provided for financially and will still have a roof over their head in the event that the main, or even sole breadwinner were to die suddenly. It’s an unpalatable thought but it’s best to protect your family against it. Also, if both of you are currently working, have you considered the cost of child and/or nursery care? People can often forget to provide against the loss of a non-earning spouse, who may be looking after children full-time – that situation has financial implications too because you may have to pay someone to provide care that had previously been the preserve of the family member.

What about your children’s education? You may wish to send your children to private school and may have aspirations that one day they will go on to university. If so, you’re going to have to make some kind of medium to long-term provision to cover the cost of both of these, putting money away each month in a tax-free Stocks & Shares Individual Savings Account (ISA) could be ideal for this and with annual limits recently increasing to £10,680 per person you will have plenty of scope to save.

Planning for the future makes perfect sense but on an even more fundamental level, you also need to budget for the present. It is crucial to have a savings cushion or emergency fund in place that is the equivalent of around 6 months worth of household income. Again this should ideally be held in a tax free Cash ISA which can be accessed immediately if any emergencies occur. One thing I find people forget is to make sure you apply for any child tax credits you may be entitled to. Additionally, child care vouchers, available via your employer, are offered to working parents as an effective way to cover the cost of childcare. You can also start a Stakeholder Pension for your new child and pay up to £3,600 pa.

Of course, you must remember that the value of investments and pensions can fall as well as rise and you can get back less than you invested.

If you would like more information about anything I’ve mentioned and would like to take advantage of a free, impartial and independent initial review of your finances then please contact me, Matthew Burman on 0117 968 8687, email: matthewburman@thinkpositive.co.uk or visit my website: www.ifa247.co.uk

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