Quick Financial Tips for Young Families
03rd May 2018
If you add up the total costs of having a kid, turning it into an adult and pushing it out into the world, you'd be surprised at what you've spent. People have done the maths on this, and it turns out that building a 21-year-old human from scratch costs around £230,000 a head! Here are a few pointers to help soften the blow.
Get the paid leave you're both entitled to
After 6 months of working for the same company, some key Parental Leave rights kick in. Generally speaking, you can expect either 90% of your salary or £145.18 a week at the current rates – whichever is less.
Maternity pay is higher for the first 6 weeks, meaning you get the 90% rate until the cap applies.
You can claim Maternity Leave for up to 39 weeks, while Paternity Leave will cover you for 1 or 2 weeks after the birth. It's actually possible to claim Paternity Pay for longer than that – up to 26 weeks, in fact. However, to get that, the mother has to end her own leave early.
Keep in mind that these rates are your minimum legal rights. Depending on your employer, you might be able to get more. Also, you need to be earning at least £116 a week to qualify for paid leave. If you are, and have been with your employer for 6 months by the time your due-date is 15 weeks away, you should be fine.
While you're at it, remember to glance at your terms of employment before you go. Those terms are protected while you're on leave. For instance, you should still be stacking up your holiday or salary raise entitlements.
Check your child tax credits
Depending on your situation, you might be eligible for thousands of pounds of help from HMRC in:
• Child Tax Credits: whether you're in work or not.
• Working Tax Credits: you don't need to have kids to get these, but they're still valuable.
• Childcare Tax Credit: this is different from Child Tax Credits, and helps ease childcare costs. It's officially called “the childcare element of Working Tax Credit”.
• Childcare Vouchers: this is an older scheme that lets you trade in some of your pay before tax for vouchers. It's on the way out, though, to be replaced in October 2018 by:
• Tax-Free Childcare: under this new scheme, the government tops up every £80 you save toward childcare costs to £100. You can get up to £2,000 a year per child this way.
What you qualify for and what it's worth to you varies case-to-case. Make sure you get solid advice about your eligibility and best options.
Think twice before taking a mortgage payment holiday
When you're hit with a number of unexpected bills at once, you might be glad of a brief mortgage breather. For a little while, at least, you might be able to ease off the throttle on your monthly payments. It sounds good in theory, but mortgage holidays come with a few warnings. You'll be racking up the interest while your payments are paused, obviously. That means you'll end up paying more, and taking longer to do it.
If you're struggling, this probably isn't your best move. You might be better off finding a less expensive option.
Make sure you're not losing too much to HMRC
There's really no cheap way to bring up a child, but you shouldn't be making it harder on yourself by losing money out of your pay packet that you could claim back from HMRC. Talk to RIFT to find out more about the help on offer or use our eligibility checker to find out if you could be due a tax rebate. The average 4-year rebate from RIFT amounts to £2,500.