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Do you feel like there’s never enough money at the end of the month? As a parent, keeping your
finances ship-shape can be a particular challenge. If you’re looking for ideas for some changes you
can make, read on.
Building a budget
We’re not taught budgeting in school, so it’s no wonder most of us struggle with it. But creating
a realistic budget is vital, especially as a parent, since families can have a lot more outgoings.
Scrutinise your bank statements to see what your income and outgoings are, and where most
of your money is spent. You might find it helpful to put all this information into a budget tracker.
Consider how you can reduce the money you spend each month. Sometimes it’s simple things
like cancelling a subscription you don’t use or switching to a cheaper utility provider. Lots of
families save money by changing shopping habits, such as buying more in bulk and choosing
own-brand products. It’s surprising how much these savings can stack up!
As a parent, you could also check that you’re claiming anything you might be entitled to. If you
have young children, check if you are eligible to receive support towards childcare.
All 3-4-year-olds in England are entitled to 15 hours a week of free childcare with an approved
provider, and for some that will go up to 30 hours. If your children are school-aged, you could
check if they are eligible to receive free school meals. Some parents will be able to get tax-free
childcare. All of this can help to stretch your budget further, so if you’re eligible, why not apply?
Share your concerns
Money is such a touchy subject for many people, but it doesn’t have to be. If you feel able to
open up any financial worries you have, it can be beneficial to talk to a trusted friend or family
member. You never know, they might have experienced the same thing. Talking about finances
doesn’t have to be a taboo, and you don’t have to feel alone.
Everyone understands that raising a family can be tough financially. You could also speak to
your bank to see if there are any products you could use to make your situation more comfortable.
For example, they might be able to offer you a current account with some added benefits, or
savings account with a higher interest rate, so your money works harder for you.
Investing for the future
As a parent, you may feel too stretched to save for your future. But even if you only have a
little income, with careful budgeting you may still be able to save for your future.
Certain people entitled to working tax credit or receiving universal credit are eligible for a
Help to Save savings account. This is a government-backed scheme to help people on a
low income to save, and savers get a bonus of 50p for every £1 they save over four years.
Another option is to set up a cash-ISA, which allows you to save tax-free and earn interest
on your savings. Interest rates can vary between banks, so it’s a good idea to do your research
to get the best rate for your money.
If you have some extra income, but still struggle to save, you could try automating it. Once
you’ve worked out how much you can afford to save each month, set up a direct debit that
goes straight into your savings account. Having this set up to go out automatically each
month means you can save your cash before you even get a chance to spend it.
Dealing with debts
As a parent with lots of outgoings, it’s easy for finances to get out of control. If you are in debt,
you’re not alone. Most people have some form of harmless debt, often in the form of student
loans or a mortgage. But it’s different when you have debts that have spiralled out of control.
Many people struggle with this and find that they can eventually get their finances in much
better shape. Read up on ways to reduce debt, including how to get out of your overdraft
and how to pay off credit cards.
You have the right to check your credit report for free, so you can see what state your
financial health is. Once you can be realistic about how much debt you are in, you can start
making plans to reduce it. This includes proper budgeting, cutting your outgoings, and finding
ways to boost your income. If your debt is affecting your mental health, make sure you speak
to a professional. The mental health charity Mind might have some useful resources for you, too.
Looking into loans
Sometimes you might need a loan, whether that’s for a smaller purchase like a holiday or a
larger one, like a house extension. There are a few different types of loan available. Personal
loans are usually for a smaller amount and aren’t tied to an asset. For larger, more risky loans,
some people need secured homeowner loans, which require an asset, like a house, for security.
Loans can be complicated, so it’s a good idea to speak to a financial advisor to explore all of
Planning for your pension
If you’re not working outside the home, it can be more challenging to save up for that
all-important pension. But even as a stay at home parent, you can still be saving towards
your retirement. If you’re receiving child benefits and your youngest child is under 12 years
old, you should be receiving national insurance credits. To receive a full state pension, you
need to have 35 years worth of credits by the time you retire. You can use the pension age
calculator on the DWP’s website if you’re not sure where you stand.
Some people also contribute to a private pension scheme or open up a lifetime ISA,
which you can open if you are under 40 years of age. With this type of savings account,
you put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus,
to a maximum of £1,000 per year. The issue with the lifetime ISA is that it’s not very flexible:
you can only withdraw the funds if you are buying your first home, aged over 60, or terminally
ill. Any other circumstances mean you pay a 25% charge.
Hopefully, this article has helped you to feel more empowered to keep your finances in
working order, so you can feel more relaxed and in control.