New
Baby, New Responsibilities
Your visitors have gone home. Your baby's settling down to sleep. Now
the awesome responsibility of being a parent kicks in!
Here
are some important things to consider when planning a secure future for
your newborn.
Making a will
The beginning of your baby's new life
may seem like a strange reason for thinking about making a will but should
anything happen to you, a will makes things very much easier for your
dependents. Making a will is particularly important if you're unmarried.
If you're separated, divorced, or a single parent,
it's vital to choose a guardian for your children. Where parents are unmarried
only the mother has legal responsibility for a child, unless the father
has obtained a court order or the couple have formally agreed that they
should both have parental responsibility for their children.
Who
will provide?
Caring for a child is a major financial responsibility. If anything happens
to you or your partner who will provide for your child? Is this time to
think about life insurance? Critical illness insurance? Consulting an
Independent Financial Advisor, who can help you put your financial affairs
in order, is a worthwhile investment.
School costs
What kind of education do you envisage
for your child? If you're thinking of independent education, fees are
going up in excess of inflation. It's becoming increasingly expensive.
Most people can't afford to pay school fees out of earned income so the
earlier you start planning, the better.
There are several financial products designed
specifically to pay school fees. If you prefer state education, a well-regarded
LEA school will push up house prices within its catchment area - something
worth budgeting for in advance.
Higher education, higher expenditure
Even if you use the state system for
your child's primary and secondary education, university has become a
costly option for many parents. At present many parents pay over £1000
p/a in tuition fees, on top of the costs of supporting a student living
away from home for several years.
The NUS estimate that the average cost of a degree
is now nearly £20,000.
These costs may increase if universities are
allowed to charge 'top up' fees or if future governments decide to pass
on more of the costs of higher education to students and their families.
The American concept of a 'college fund' will become more prevalent in
the UK as parents try to anticipate the demands of higher education on
their purse.
Grandparent
giving
Do your parents want to start a savings plan for your baby? What's the
best way to invest for maximum growth until your baby is 18?
Opening an account for your baby
If you open a bank account for your child,
you'll need to produce the birth certificate and other forms of ID. Children
have the same personal tax allowances as adults (up to £4,335 in 2000-2001).
Make sure you fill in form R85 and return it to the Inland Revenue to
get their interest paid in gross. If you pay money into your child's account,
you may have to pay tax on the interest if the gift exceeds £100 per parent.
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