STARTING A FAMILY

WHAT STEPS TO TAKE TO PREPARE FINANCIALLY

Having a baby is one of the most exciting, life-changing events that you’ll ever experience. But along with the joy and happiness that comes with starting a family, there is also the reality of the added costs.

On average in 2021, the total cost of raising a child to the age of 18 now stands at £160,692 for a couple and £193,801 for a lone parent. These numbers aren’t small, which is why it is important to consider your financial planning options before starting a family.

The total cost of raising a child, the report highlights, is the highest it has been since calculations started in 2012. Since 2012, the total cost has risen by 13% for couples and 25% for lone parents. The rise in the last year has been particularly large – 3.6% for couples and 3.3% for lone parents.

Fortunately, there are ways to ease the financial burden and protect your new family.

CREATE A BUDGET

One of the best ways to prepare for the added expenses of having a baby is to create a budget. Track your income and spending so you have a clear idea of where your money is going each month. Then, start setting aside money each month to cover the anticipated costs of having your baby.

If your income is likely to change after the arrival of your baby (for example, if you reduce or stop working) then it may also be a good idea to consider cutting some costs. It can be helpful to sort your expenses into essential and non- essential items so you can find ways to save.

EMERGENCY FUND

Building an emergency fund is a savings account that you can easily access and use in case of unforeseen circumstances. This could help you weather a financial storm that comes your way and keep you from going into debt. Aim to save at least three to six months’ worth of living expenses, or what you can afford, so you have a cushion in case of an unexpected financial emergency.

Remember, this is a pool of money that should only be used during times of financial need, for example, resulting from a job loss or unexpected expenses such as major home or car repairs, illness, etc, that can cause real financial hardship.

FAMILY PROTECTION

This is all about having a financial safety net in place so that your family can remain financially secure should the unthinkable happen. Family protection will typically include life insurance, critical illness cover and income protection.

It is also essential to make a Will that shares your wishes after death. You will need to appoint executors and trustees to administer your estate and ensure it is shared in the way you intended it to be. You can also determine who will be your child’s guardian, should you die before they become adults.

FINANCIAL FOUNDATION

All parents want to give their child the best possible start in life. As a new parent, one of your key priorities is undoubtedly ensuring that your child has everything they need to lead a happy and successful life. Part of this involves setting aside money for their future – whether it be for their education, purchasing a first property or simply establishing a solid financial foundation. It can also teach them valuable lessons about managing their finances.

When it comes to saving and investing, the sooner you begin, the more time the money has to grow. Options may include: Bank/ building society accounts, Junior Individual Savings Accounts(JISAs) and a Junior Self- Invested Personal Pension (JSIPP). No matter how you choose to save or invest for your child’s future, the important thing is that you start now.

TIME TO DISCUSS PREPARING FINANCIALLY FOR YOUR NEW BABY?

When it comes to making the sorts of plans we’ve mentioned above, the help of an expert can be invaluable. Preparing financially for your new baby doesn’t have to be difficult or overwhelming. By following these simple tips, you can ease the financial burden and focus on enjoying this special time with your new bundle of joy. To discuss how we could help, please contact us for more information.

THE VALUE OF INVESTMENTS CAN FALL AS WELL AS RISE AND YOU COULD GET BACK LESS THAN YOU INVEST. IF YOU’RE NOT SURE ABOUT INVESTING, SEEK PROFESSIONAL ADVICE.

WHAT DOES INFLATION MEAN FOR ME AND MY MONEY?

HOW TO PROTECT AND GROW YOUR WEALTH OVER TIME

Inflation is one of the most important factors that savers and investors must take into account when making decisions about their money. Although inflation can eat away at the purchasing power of your savings, it can also create opportunities for profit if you invest in assets that are expected to increase in value faster than prices overall.

Inflation is thus a crucial factor to consider when making any decisions about your money. By understanding how it works and its potential impact on your finances, you can make more informed choices about how to protect and grow your wealth over time.

YEARS OF VERY LOW AND STEADY INFLATION

After years of very low and steady inflation, prices are currently moving higher rapidly. In the UK, this is most obvious in the rising cost of energy, fuel and food. And because of the crisis in Ukraine, it doesn’t look like inflationary pressures will ease any time soon.

Oil and gas prices are likely to remain higher for much longer as sanctions against Russia, one of the world’s largest oil and gas exporters, take effect. Food prices are likely to continue to rise too because Russia and Ukraine are big grain suppliers.

MORE OPPORTUNITY TO GROW IN VALUE

For savers, or those in retirement, it’s important to manage savings to help mitigate the impact of inflation. To do this, your money needs to grow in value. Which is where investments can be so valuable as they give your money more opportunity to grow in value over the longer term than cash savings, and importantly to keep pace with, or even beat inflation.

Another way to protect your portfolio from inflation is to invest in assets that generate income. For example, bonds and dividend-paying stocks can provide you with a steady stream of income that can help offset the effects of inflation.

TAKE ADVANTAGE OF INFLATIONARY TRENDS
Finally, you can also take advantage of inflationary trends by investing in assets that are likely to benefit from rising prices. For example, commodities like oil and gas, as we have seen over recent months, tend to do well when inflation is on the rise.

No matter what strategy you use, it’s important to stay diversified and to monitor your investment portfolio closely. By doing so, you’ll be better positioned to weather any potential storms that may arise due to inflation.

IS YOUR MONEY WORKING AS HARD AS IT SHOULD BE?
We take a personal and proactive approach to managing your wealth. Once we’ve understood your requirements, including your timeframes, the amount of risk that you are comfortable with and how much loss you can bear, we’ll tailor an investment portfolio to meet these objectives. To find out more, please contact us.

SELF-EMPLOYED VULNERABLE TO FINANCIAL SHOCKS

NEW RESEARCH HIGHLIGHTS THAT 81% AREN’T SEEKING FINANCIAL ADVICE

As more and more people reject the traditional working structure in favour of becoming self-employed, some people could be at risk of financial insecurity as they lose out on employee benefits that offer protection in the present, and financial planning for the future.

New research highlights this group’s vulnerability to financial shocks and the importance of expert financial advice to open up conversations to ensure that all aspects of protection are discussed, and that the right solutions are in place to help create financial peace of mind.

FACING FINANCIAL HARDSHIP

If you are self-employed, you may not have the same safety net as those who are employed by someone else. If you become sick or injured and are unable to work, you could face financial hardship without income protection insurance.

Income protection insurance could help replace your lost income if you are unable to work due to an illness or injury. It can give you peace of mind knowing that you will still be able to meet your financial obligations even if you are unable to work.

SEEKING FINANCIAL ADVICE

Over half (57%) of self-employed workers in the UK rely on personal savings when they are not working, yet a massive 81% aren’t seeking financial advice according to new research[1]. Nearly two-thirds (64%) of those who are self- employed in the UK revealed they are without a regular income, with just one in five (23%) receiving a monthly pay packet.

The research also found that almost half (48%) of self-employed people see their income fluctuate as a result of owning their own business, with a similar proportion (49%) putting this down to being a freelancer, contractor or consultant

VULNERABILITY TO FINANCIAL SHOCKS

As the cost of living rises and private rents and mortgages in the UK increase at the fastest rate in five years, a quarter (24%) of those surveyed said they only had enough money to cover such costs for three months if they were unable to work.

With the research highlighting the group’s vulnerability to financial shocks and the importance of expert financial advice, worryingly one-quarter (24%) say they hadn’t thought about seeking professional advice.

SECURE FINANCIAL PROTECTION

Not being eligible for Statutory Sick Pay (SSP) can prove a real problem for the self-employed and their financial resilience – during the pandemic, a fifth (21%) of all applications to the Test and Trace Support Payment scheme were from this group, according to a Freedom of Information request by The Community Union.

And while many have taken steps to secure financial protection for themselves and their families, 13% of self-employed workers in the UK still don’t have critical illness cover or life insurance.

NOT SURE WHAT YOU NEED?

When you’re self-employed or a contractor, you get the perk of being your own boss, but you wave goodbye to traditional employee benefits like company sick pay. To discuss how we can help protect your future financial wellbeing and to discuss the options available to you, please contact us for more information.

RISING COST OF LIVING CRISIS

3 TIPS TO MAINTAIN YOUR FINANCIAL WELLBEING

The rising cost of living is one of the most pressing issues facing many families today. The price of food, energy, fuel and other necessities has risen significantly in recent months. This has made it difficult to make ends meet and has put a strain on many household budgets.

Planning for the rising cost of living can be a challenge, especially if your income isn’t keeping up with inflation. As many people feel the squeeze as the cost of essential items continues to increase, there are a few important things to consider to maintain your financial wellbeing.

1. REVIEW SPENDING

The rising cost of living can be a real problem, especially if you’re not mindful of your spending. Going through your spending with the finest tooth comb can help you find areas where you may be able to cut back, and save money in the long run. Keep an eye on your budget and make adjustments as necessary to ensure that you are aware of your outgoing costs and can adapt your spending accordingly. Being able to see exactly where your money’s going will help you to pin down where you can make savings and cuts.

Ask yourself: What’s coming in and going out? Can I get something for cheaper? And (often the hardest of all): Do I really need that? Look at the money you have coming into your home – whether that’s just you or with someone else. You want to look at every single thing that’s going out (there may be a lot more than you think).

2. EMERGENCY SAVINGS

When it comes to financial security, one of the most important things you can do is to keep emergency savings aside for when you need them. Having a nest egg that you can tap into in times of need can help you weather a storm. One method is to create a dedicated savings account that you only use for this purpose. This way, you can easily access the funds when you need them but they remain out of reach for everyday spending.

Aim to build up enough to cover between three to six months’ expenses, or as much as you can afford. The best thing to do is make room for your savings in your budget as one of your outgoings. By doing so, it’ll help you see your savings as a must, rather than a must- do-later. And if you can, set up an automated payment from your normal bank account straight into your savings account – that way you don’t even need to think about it.

3. PENSIONS AND INVESTMENTS

As many people across the country are feeling the squeeze of a cost of living crisis, it’s more important than ever to make sure your finances are in good shape. One way to do this is by making sure you don’t touch your pension or investments. While it may be tempting to dip into these savings to help make ends meet in the short term, it’s important to think about the long-term impact this could have on your retirement plans.

Drawing down on your pension or selling investments could leave you worse off in the long run, so it’s important to consider all of your options before making any decisions. Consolidating your old pensions into one could help you cut down on management fees and give you a better picture of how your finances are looking. But before transferring your pensions it is essential to obtain professional financial advice.

DON’T FORGET YOUR LONG-TERM FINANCIAL SECURITY
It’s important to think about the long term when it comes to your finances. Making short-term decisions could jeopardise your long-term financial security. To discuss your situation or plans or for further information, please contact us.

WEALTH VS HEALTH

MORE THAN HALF IGNORE MEDICAL ADVICE AND WORK DESPITE POOR HEALTH DUE TO FINANCIAL WORRIES

When you are off work due to an illness or injury, worries about how you are going to pay your bills can make an already stressful situation worse. So much so that many people are finding themselves in the very difficult position of having to put the need to earn money over their health by continuing to go to work, even when advised not to by a doctor.

Worse still, financial concerns mean some are avoiding seeing their GP altogether, even when concerned they may have a serious illness. Money worries see six in ten people go to work when they are ill, with one in three ignoring their doctor’s advice due to financial concerns, even when they are worried about serious illness, according to new research.

NO FINANCIAL PROTECTION IN PLACE

Three in ten people have no financial protection if they were off work should they fall ill or become injured, while 27% could financially only last for a month. The findings highlight that sick and injured Britons are forcing themselves back into work, despite doctors’ advice, due to having no financial protection in place.

Nearly a third (32%) admitted to not following their doctor’s advice because they couldn’t afford to take time off, while 43% would put off going to the doctors due to financial concerns – even if concerned they may have a serious illness.

NEGATIVE IMPACT ON MENTAL WELLBEING

The research also highlights that while nearly half (49%) say they would benefit from a policy that would cover their income if off work for an extended period, just 27% actually have any income protection cover in place, with 32% unaware of what such a policy is.

Money worries can have a negative impact on people’s mental wellbeing, with nearly two-thirds (64%) of those surveyed saying they fret about how they would cope financially if they needed to take four weeks or more off work due to poor health.

SICK AND ON A REDUCED INCOME

Three in ten (30%) surveyed have nothing in place to support them financially should they be ill or injured, while 29% would rely on Statutory Sick Pay, which at £99.35 per week for up to 28 weeks (tax year 2022/23), pays much less than many people need to cover the cost of living, which continues to rise.

If on long-term sick pay and on a reduced income, many would use their existing savings (45%), make reduced payments (33%), borrow money from family or friends (25%), or use a credit card or loan (15%). However, during the pandemic a third (34%) of people had already dipped into their savings, meaning they may now have less to fall back on.

LONGER-TERM FINANCIAL IMPACTS

As a result of this situation, more than half (55%) admit they could only survive for three months, while more than a quarter (27%) would struggle after just one month. The additional financial pressures of being off sick for four weeks or more could push people to prioritise their household expenditures. The top five things that the people surveyed prioritise include utilities (67%), mortgage/rent (65%), food (56%), insurance i.e. car/ home/pet (15%) and internet/broadband (13%).

As well as the immediate impact of long-term sickness, many people are also concerned about the longer-term financial impacts, with almost half (49%) of those surveyed saying they worry about the impact on their ability to get credit in future. This is particularly an issue for the self-employed, where 43% worry about losing customers and just over a third (36%) worry that their business would have to fold.

TIME TO DISCUSS INSURANCE THAT WORKS WHILE YOU CAN’T?
Consider how you’d cover your usual monthly costs if you were ill or injured and couldn’t work for a while. Would you be able to carry on paying the bills using Statutory Sick Pay or your savings? If not, it’s worth thinking about insurance. To find out more, please contact us.