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Your Money > Personal Finance Articles > 10 financial changes...
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By Sarah Modlock When you are starting a family, you can guarantee that dozens of people you know - and a few you don't - will volunteer advice. You can expect to be told to make the most of your social life because it will soon be over (complete with smug look). Infinitely more helpful - we hope - are tips on how to make financial changes and savings at a time when you may need them most. With this in mind the ethical money brains at Co-operative Insurance have teamed up with The Children's Mutual, its Child Trust Fund partner, to put together advice for new families on a budget. And I've thrown in my tuppence-worth, too: 1. Your budget Ideally, you should review your budget a couple of times a year and in anticipation of any lifestyle changes. Given that the latter does not come much bigger when a baby arrives, it's time to sit down with a pen and paper. You know the drill; income in one column and all outgoings in another. Listing everything you spend in detail will also help you cut back if you need to. 2. Finances in the home Consider changing your mortgage to reduce your monthly outgoings. This could mean a switch to a flexible mortgage which will help if a mum-to-be is giving up work for a while. Alternatively, moving to a fixed rate loan will ensure that you know the precise rate you will pay, making budgeting easy and taking the worry out of base rate changes. Check with your existing lender first to find out whether you will face penalties for switching, although you may find you can still save more over time by switching anyway. While you're at it, review all your bills. You could save a small fortune by switching energy, landline and mobile providers, particularly if you have been with the same suppliers for a while. 3. Re-evaluate your choice of vehicle Sadly, a two-seater sports car or a trendy coupe is not always the most practical option when you become a new parent. Think about a more economical run-around with low fuel emissions and modest maintenance costs. A more family-friendly car would also lower the cost of motor insurance and vehicle excise duty. Whatever you do, resist buying a 'Baby on Board' sign. 4. Claim your benefits Hugely important, particularly if you have never claimed for anything before and the concept seems alien. Now it's your turn to get something back from the government. Everyone is eligible for child benefit and most parents - even higher rate taxpayers - are eligible for monthly Child Tax Credit. The opportunity to claim this tax credit is often overlooked by parents but nine out of 10 families qualify for it but every little helps. There are several other services and benefits available so don't miss out. 5. Don't forget your Child Trust Fund Every child born on or after 1 September 2002 will receive an initial lump sum payment of £250 (or £500 for families that qualify for full Child Tax Credit) from the government. A voucher will be sent to the Child Benefit claimant, usually the parent, which is then used to open a Child Trust Fund (CTF) account with the provider of their choice, likely to be a bank, building society or investment company. The money can then grow into a nest egg for your child. A maximum of £1,200 can be saved in your child's CTF account every 'contribution' year which starts from your child's birthday each year. 6. Grab vouchers and discounts Many companies such as Boots have specific baby clubs, where you collect points from your purchases and redeem them in store. These companies have different incentives throughout the year with lots of free offers and money-off vouchers so make the most of them. There are lots of hint online from sites such as babyfreebies.co.uk. 7. Sort your sitter Prove those smug friends wrong about your social life and save cash by joining or setting up a babysitting circle. Parents could save around £30 an evening by getting together with a few friends and exchanging babysitting favours. 8. Real nappies Controversial one this. Do you opt for disposable nappies which may finally breakdown on a rubbish tip by the time your children have great-grandchildren of their own, or use real nappies which many believe cause damage to the environment through the energy and detergent used to launder them. Co-operative Insurance says that these days real nappies (often known as re-usable, cotton or washable nappies) are easy to use and wash, better for your baby and can save you lots of money. It is estimated that disposable nappies will cost parents more than £920 over two and a half years. Cloth nappies, on the other hand, come in at under £200 over the same period, which saves almost £300 a year. Martin Lewis weighs up the financial and environmental costs on his website moneysavingexpert.com. 9. Recycle kit People with children tend to know other people with children. Make the most of opportunities to borrow and lend clothes, toys and equipment and everyone can save. Check out the internet for cut-price kit or try putting up a request with details of things you would like to buy on you company's notice board or at the nursery. 10. Gifts can make a difference When you give birth, the one thing that all the those dozens of opinionated people will want to do is give you and your baby a gift. Don't be afraid to let people know what would be useful and help keep costs down. 'Asking grandparents, godparents and friends to contribute to your new baby's Child Trust Fund instead of token gifts is a great way to ease the strain during the first couple of years,' says Co-operative Insurance's David Newman. 'That way, you child will be well on his/her way to a healthy financial head-start in the future,' he adds. |
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