Five top tips for investing as a parent

When you have children demanding your time and attention, it can be easy to let your financial goals slip. Yet investing doesn’t have to be as all-consuming as it may seem. 

By setting aside money each month, it’s possible to boost your family’s future finances relatively simply. Here are five tips to help you get started.

1.    Work out how much to invest

Children don’t come cheap. Before you start investing, your first step is to add up your monthly outgoings and then compare this figure with your take-home pay. As well as obvious expenses such as nursery fees, school fees, your mortgage and utility bills, make sure you include things like after-school clubs, new clothes, stationery, and gadgets.

You can then decide how much of your surplus cash to invest. Bear in mind that you should keep six months’ worth of essential expenditure in an easy-access savings account. This will help you pay for any unexpected emergencies.

Don’t worry if you aren’t able to invest huge amounts of money each month. Thanks to the power of compounded investment growth, even small amounts of money could grow into a sizeable pot over time. 

2.    Set a goal to work towards

Thinking about what you are saving and investing for will give you something concrete to work towards. Your financial goals will be completely personal to you. They could include saving up for your children’s university fees or a deposit on their first home. 

Defining your goals will not only help you maintain your motivation for investing, but will also help you decide where to invest your money. In general, the longer you invest, the more risk you can afford to take on. Shares are volatile but history shows that, over time, they tend to perform more strongly than cash.

3.    Take advantage of tax allowances

Investing through a tax-efficient wrapper, such as an ISA, enables you to shield your money from tax. This means more of your money goes towards your family’s future. You can invest up to £20,000 in ISAs in the 2022/23 tax year, which effectively doubles to £40,000 if you are married or in a civil partnership. 

You don’t have to declare ISA investments on your tax return, which is one less thing to worry about.

4.    Start a Junior ISA for your child

As well as investing through an adult ISA, you could also consider opening a Junior ISA for your child. They can’t access the money until they turn 18, by which time it could have grown into a significant investment pot. Anyone can pay into a Junior ISA, so you could encourage your children’s grandparents, godparents, aunties and uncles to make contributions at Christmases and birthdays. 

As they get older, talking to your child about their Junior ISA is a great way of teaching them important financial skills.

5.    Trust the experts

Many parents simply don’t have the time or inclination to get their heads around investing, and that’s where getting some smart advice can help. A financial adviser will take the time to understand your family’s circumstances and goals and then help you build an investment portfolio that suits your individual needs. You can get back to focusing on your family, safe in the knowledge that you’re doing everything you can to help build a more secure financial future.

For smart advice that’s tailored to you, speak to one of our advisers today.

The value of investments, and any income from them, can fall and you may get back less than you invested. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy.