If you are a stay-at-home mum or dad, finances allowing, you can still put some financial security in place for yourself. Many people wrongly assume that financial planning is something that only their working partner can get involved in.
You do not have to be a UK tax payer to take advantage of tax efficient planning and sensible protection policies.
Have your own pension pot
Anyone can pay money into a pension plan. You do not have to be working, nor do you have to be paying tax. Even a baby can start a pension plan!
You are still eligible to receive ‘tax relief’ from the government, (even though you are not paying any tax). So if, for example you pay £20 per month into a pension plan, the government will top it up to £25 per month.
If you have a lump sum that you are happy to tie up until your retirement (the earliest you can take funds out of your pension plan is age 55), you will also receive tax relief. For example a single payment of £1,000 into a pension plan would be boosted by an additional £250 by the government.
Putting in money to your pension plan in your 20’s and 30’s is the most effective way to invest.
Protect your standard of living
Even if you are not earning a salary, you can still take out a form of ‘income replacement insurance’.
Consider for a moment how much you are worth in monetary terms. If you were unable to function as a full time mother/father and home-maker because of illness, you can insure yourself for up to £1,200 per month. This benefit would be paid out to you while you were unwell. Typical cost for a female non-smoker would be around £28 per month.
An Independent Financial Adviser would be able to sit down with you and break down all the possible areas of your life you could plan for and protect, financially. The cost can often be flexible, and more affordable than you might think.
Henrietta Oxlade is an Independent Financial Planner with Radcliffe & Newlands and MyFamilyClub’s in-house finance sage! She has been advising individual clients since March 1988, which is why many of her clients consider her part of the family. If you want to contact Henrietta, email us on [email protected] and we’ll put you in touch.