Your three top things to fix
You know when you’re a Tired Parent. You fantasise about sleep. And you hum CBeebies tunes in the supermarket. Probably in your 30s or 40s with a little one at home, we can help with the most immediate financial to-do list.
Life insurance. Wills. Junior ISAs.
Take the one hour challenge to sort this!
Wills and Life Insurance
The basics of financial management for Tired Parents start with protecting what financial advisers sometimes disturbingly refer to as ‘human capital’. That is – you . And your partner, if you have one. It means any income you bring in and any assets you have.
Becoming a parent forces you to be a grown-up, ready or not. Suddenly, you’re the go-to person for everything from skinned knees to why the ceiling is where the ceiling is to how to manage tax offsets, whether you were able to do so before the kids came along or not.
Luckily, the protective stuff is really easy to do. In the next step, we’ll take you through how to make your will and how to find some decently priced life insurance. The main thing to remember here is the earlier you do it, the better – it’s cheaper when you’re younger and don’t have smoker’s cough/dodgy knees/psychosis from extended sleep deprivation.
If you're a healthy 40-something, you should be able to get £100,000 of life insurance for about £10 a month for example. We'll suggest how and where. You can get a quote in 10 minutes online.
As for the will - as a very quick starter option which is better than nothing, you can buy one at Amazon. That's another 10 minutes to sort. The it will sit on your desk looking at you until you complete it!
Aside from protecting yourself, many Tired Parents want to start saving for their children. Again – the earlier the better. Child Trust Funds have bitten the dust and Junior ISAs are the new kid on the block. Set aside a tax free pot of cash for your kids which you, friends or grandparents can pay into. You can set one up online in less than half an hour.
All children residing in the UK are eligible for a Junior ISA. Anyone can contribute up to the annual allowance of £9,000 for this tax year. It automatically converts to an adult ISA at age 18. These are not for knickerbocker-wearing brats only. Just £1 a day is enough to get saving.
At the end of the learning path, we’ll suggest some links and guides on Boring Money that go into more detail.
And point you to our Best Buys where you can read what other parents make of their Junior ISA providers.
If you die without a will, your family’s worst nightmare just gets bigger. At best, this will be a serious admin headache. At worst, they could lose their home. Don’t risk it. Especially true if you’re not a traditional married-with-2-kids family.
Here's an example of why this matters. If you’re not married and die without a will, then the money goes to your kids, not your partner. It’s held in trust for them ‘till they are 18. So how would your partner pay the mortgage? If you’re separated but still legally married, your ex could get it all. Nice. Just some examples of why it's critical to specify your wishes and not leave it to a bureaucrat in a suit.
Carving out 2 minutes to go to the loo by yourself can be a challenge, let alone prioritising a will. If you are short of time then you can consider doing a quick cheap-y and buying a DIY will kit on Amazon. Better than nothing. Our Options tab shares a few other suggestions.
Don't forget to investigate a Lasting Power of Attorney at the same time. This is nominating someone to act on your behalf if you go ga-ga. You can sort this on the government's website for £82.
Life insurance often ends up in the too-hard basket. But come on parents! If you've worked out how to collapse a buggy and fit a car seat, this stuff is a cinch.
Just 25% of Brits have life insurance. FACT: we're more likely to insure our pets than ourselves. But as much as you love Moggie, she won't pay the mortgage for your kids if you get hit by a bus. You could sort this in 10 minutes.
Employed? Call HR tomorrow and ask them what your cover is. It's usually about 3 to 4 times your salary. You can always choose to top that up privately if that wouldn't cover the mortgage, for example.
If you need a helping hand, Lifesearch offers phone advice and it's a nice halfway house between a DIY approach and full-fat financial advice.
Costs put many people off but most of us don't have a clue how much life insurance would be. It may not cost as much as you think. A healthy 40 something who hasn’t hit the fags since Take That were No 1 can get OK cover for about £10 a month
Do check this with your employer – you may be covered through work although sometimes the dreaded ‘downsizing’ hits perks so double-check any assumptions.
Look at your partner. Could they continue your family’s lifestyle without your salary? If the answer is No, then it's time to sort this out.
The other popular type of insurance is income protection which covers you if you are incapacitated and cannot work. It does a different job but for most people juggling the reality of limited budgets this is an either-or decision based on your situation.
Junior ISAs are just as flexible as a normal ISA. Investors can invest in range of underlying investments, including cash, the stock market and government bonds. The temptation – because it is for your children and we spend our lives trying to keep them away from risk – is to play it safe and to keep it all in cash. However, if your kids are 13 or under, which by definition means that you are saving for at least 5 more years, you can afford to take a little more risk with children’s savings because you have time to ride out the highs and lows of markets.
All children residing in the UK are eligible for a Junior ISA. Anyone - parents, grandparents, generous godparents - can contribute up to the annual allowance of £9,000 for this tax year. It automatically converts to an adult ISA at age 18.These are not for knickerbocker-wearing brats only. Just £1 a day is enough to get saving.
Our children’s JISAs are in fairly spicy things like emerging market shares – pretty hard core stuff but we have a very long time frame to play with. Over an 18 year time period, shares are 99% more likely to do better than cash. Over 10 years? 75%. OK that’s based on rear-view mirror stuff and not a crystal ball.
But ask yourself if your nervousness about markets is preventing your money from working as hard as it should be? As always, no-one can guarantee that stock markets won't fall. We just have to work on the balance of probability.
If you want a cash JISA do shop around online for the best rates. JISA rates are typically better than your average savings account rates.
If you are interested in a stocks and shares JISA then look at our Best Buys table to see who we rate and why. Rates are correct as of April 2019 and the links are in the ‘Your Options’ section of this learning path.
Life insurance - super important for parents
Life insurance often ends up in the too-hard basket. But come on, parents! If you've worked out how to collapse a buggy and fit a car seat, this stuff is a cinch.
Just 26% of Brits have life insurance. In fact we are more likely to insure our pets than ourselves. But as much as you love Moggie, she won't pay the mortgage for your kids if you get hit by a bus. You could sort this in 10 minutes and we’ll show you how.
Video: Holly and a baby explain life insurance for parents https://vimeo.com/222684769
Ready to choose a product? Compare quotes at compareethemarket.com
Junior ISAs - tax free savings for kids
Junior ISAs are excellent ways to save for your children and give them a head start. If you want to go down this road for your cherubs, here are some places you can go next:
Have a look at our straightforward, comprehensive guide to Junior ISAs
The Coventry Junior ISA
Nationwide Junior ISA
Tesco Junior ISA
Want to compare a longer list of providers and get investors’ ratings? Have a look at our Best Buy tables.
Wills - can be done in 30 mins online
Think of this as a way to go out on your own terms, not the courts’. Having a will truly doesn’t take long and it makes things a whole lot easier for your family, especially your kids.
Read through our 5-page Guide to Wills before you phone the solicitor. There are a few things which might trip you up.
Ready to get going? Solicitors Irwin Mitchell offer an online service starting from £145+VAT for a single will. Or call your bank – but don’t pay any more than £150 for a basic will.