Balancing motherhood and financial security

Juggling responsibilities can often push long-term financial planning to the sidelines

Motherhood is a multifaceted journey, where the daily juggling responsibilities can often push long-term financial planning to the sidelines. Yet, dedicating just a small time window to review your finances could dramatically enhance your financial outlook. While managing finances is important for everyone, mothers encounter challenges requiring tailored financial strategies to ensure stability and growth.

Building a financial safety net

For mothers, establishing a solid emergency savings fund is not merely advisable—it’s essential. Unexpected expenses, like urgent car repairs or household emergencies, can arise without warning and impact your financial well-being. By maintaining an emergency fund that covers at least six months’ worth of essential expenses in an easily accessible savings account, you can safeguard against the financial strain these costs might impose, ensuring your long-term financial goals remain on track.

Consider setting up an automatic monthly transfer to your savings account to build this fund gradually. This approach makes saving more manageable and ingrains a habit of prioritising financial security.

Protection for your loved ones

It may be prudent to secure an income protection policy in families where your income contributes significantly to bills, childcare, or educational costs. This insurance cover offers a financial lifeline if you cannot work due to a long-term illness, ensuring your children’s lifestyle remains unaffected by financial instability. Similarly, life insurance is essential, providing a financial safety net to your family in case of your premature death.

Life insurance can cover critical expenses, such as mortgage repayments, alleviating financial burdens and offering peace of mind. When exploring insurance options, assess the cover that best suits your family’s needs and consider the premiums in relation to your budget, opting for policies that provide comprehensive protection.

Securing your retirement future

Taking time off work to raise children can significantly impact your pension savings, making it imperative to focus on bolstering your retirement funds. A fundamental step is to ensure you qualify for the full state pension by maintaining National Insurance (NI) contributions. Mothers who are not currently working can still earn NI credits by claiming child benefit, protecting their state pension entitlement.

Furthermore, consider topping up workplace or private pensions, which come with tax benefits, making them a cost-effective saving method. The tax relief on personal pension contributions means you gain more from your savings, substantially boosting your retirement fund. For instance, if you receive cash gifts or inheritances, if appropriate, directing them into a pension could significantly enhance your financial security in retirement.

Investing in your children’s future

If it’s within your means, investing in your children’s future can offer them substantial long-term benefits, potentially aiding with university fees or a first home deposit. Investing in the stock market can yield greater growth compared to traditional savings accounts. A Junior

Individual Savings Account (JISA) allows tax-free growth and locking funds until your child turns 18. This structured investment approach can help in securing their financial independence.

When investing for your children, consider diversifying the portfolio across various asset classes to balance risk and return, and regularly review the investment performance to ensure it aligns with your financial objectives.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.