Financial Planning when you decide to have a family can seem overwhelming and it often gets put on the long finger as a result.

We have all heard the well-intended advice, sleep when the baby sleeps, you can’t drink from an empty cup and so on. Friends and family mean well, and the intention is to really say look after yourself first, so you are able to look after the baby.

The same advice applies to your financial wellbeing. Plan for yourself first, so your family can be provided for financially should anything happen to you or your aspirations for them. It is not about over saving or over protecting. The aim is to work with each family on an individual basis and figure out what’s right for them. No two families are the same.  

Here are my top tips for young families when in it comes to financial wellbeing.

1. Protect your salary

The first step is to protect your salary – if you’re salary is stopped due to being unable to work as a result of accident or illness, Income Protection policies keep the bills like mortgage/rent/food shop ticking over. Your income is your biggest asset. Think about your annual salary over the next 30 years, and its value. This could be €1.5million, a lot more than most homes are valued at, yet we automatically insure the house and not the salary that pays for it.

2. Life Insurance

The second step is Family Protection – do you have a life policy in place? Public Sector employees have a death in service policy (life cover) and most private sector employees do also. It is important to sit down with an advisor and let them analyse how much you have in place versus how much you need.

This will depend on how many children you have and how much debt you have. The earlier you take out this policy the more cost effective it is. The idea behind a life insurance policy is to provide an annual income if you pass away until the children finish college. Nobody wants to think about these situations however, the alternative could be worse, the unimaginable happens and your spouse/partner and children are left behind with an income lost as well as a parent. Your bills and activities still need to be paid and we want to make sure you are protected against the financial stress a death can bring. An advisor will work within the household budget to provide a policy to suit you and your family. At Cornmarket, we always say, something is better than nothing.

3. Achievable Saving & making the most of your money

Thirdly, Lifestyle Protection – most of us would love to save and would like to know we are saving in the right place and getting some type of return. When you meet with an Advisor, we look at your household income and outgoings. Typically it is advisable to save at least 5% of your take home pay. Typically, we advise to have 3 to 6 months take home pay in a rainy day account.

Once that’s done, we think of your goals, would you like your kids to attend college? Your child benefit is a great way to get this started. You didn’t have this before the tiny feet arrived so, if possible, put it to good use with an Education Fund. It’s also important to remember it’s never too late to start. We hear that saying so often, but when it comes to saving, it really is true. 

You’ll be surprised how this can build up over time and you’ll have peace of mind knowing you’ve put a plan in place for when it’s time for them to go to college or flee the nest. Why borrow at 6% to 8%* when you can save and get a return on your hard earned income?  

4. Retirement, the long term goal!

A long term goal may be retirement, we know this is complicated but that’s where an advisor can help. By understanding your situation and breaking it down to an achievable plan, long term goals become less daunting. You have time on your side now, let’s get your plan in place. Early retirement is a common goal for our clients and it’s achievable once you get advice early.                

We hope you learnt a tip or two from Eimear’s overview. A little knowledge can go a long way. If you’d like to learn more or chat through any of the tips above in more detail, click here to make an appointment or call us on (01) 416 0216, we’re looking forward to helping you and your family plan for the future.  

*Source: Cornmarket, CCPC rates 30th January 2024