How to plan for you and your family
Getting married and starting a family are two of the biggest milestones that a person can experience in their lives. Unfortunately, they're also two of the most expensive, and should be approached with financial caution – because there's nothing more romantic or exciting than monetary planning! Ultimately though, that's the reality unless you've got family lining up to help you out or have hoards of money stashed away. By planning effectively it is possible to create a financially safe and secure environment, whereby everything from everyday living costs to retirement and beyond is taken care of.
First, ensure that you speak to your partner about your shared and individual plans and dreams for the future so that you have an accurate idea of what your short- and long-term goals actually are. Having this conversation will also allow you to realistically assess your financial situation. As part of this, ask each other where you see yourselves living in retirement years? Do you plan to travel? Do you intend to support your children during studying or training towards their career? Do you want to invest in property?
Once you've worked out what you can afford you can set the wheels of your financial plan in motion. There's a lot to give thought to, and by considering things early you could save yourselves a lot of bother later on down the line. An Independent Financial Adviser (IFA) can help with the execution of your plans, as well as advise on the best way to structure your asset base, tax and income position so that you get the most from your money with minimal risk.
If saving for a wedding is on the cards, an adviser can help you to choose appropriate savings vehicles or build up an investment portfolio, if you're in a position where you can take on the risk of losing some interest and/or cash. The average cost of a UK wedding in 2017 was £27,161. Once you've determined your own personal budget and anticipated cost you'll be able to work out how much you'll need to save and over what time span. A £15,000 wedding is feasible within three-years, for example, if you were to save just over £400 a month. Naturally, the more you're able to put away into savings vehicles like an Individual Savings Account (ISA) over a shorter period will maximise the interest earned.
As for the cost of raising a child, the average price is around £230,000, or £373,000 if the child goes to a private day school. Trying to balance caring for your family and saving for retirement can be tricky to say the least, which is why advanced retirement planning is the key to keeping all plates spinning successfully. An IFA can work closely with you to determine the best approach and ensure your Annual Allowance and Lifetime Allowance are optimally utilised. They can also keep you abreast of any taxation changes that could affect your pension savings.
You may not want to think about it but it's never too early to plan ahead for your family for after you die. With your pension you can arrange a lump sum benefit to be paid to your spouse. However, if the value of the benefit takes the worth of your estate over the Inheritance Tax threshold and increases liability, it might be worth considering establishing a trust instead. This avenue can be a savvy way to ensure loved ones are protected without incurring any additional charges, but the process can be complex so it's always best to seek professional help.
If you wish, you could set up trusts for death in service and life insurance policies too, whereby all pay-outs would go to the trust rather than form part of your estate. Of course, it all depends on what the value of your estate is worth, so it is wise to weigh up all of your options to get the best result for your family. For day-to-day cover, income protection is always advised – for both you and your spouse. That way, if either of you are unable to work due to sickness, injury or an accident you'll still be able to pay all of your bills, continue with any savings or investments – including pensions – and guarantee the livelihood of your family.
Caring for a family isn't cheap, but with organisation and help from a specialist IFA that understands the intricacies of dentist wealth planning, you can secure long-term financial security for you and your family.
i. Independent: 'Cost of average British wedding hits all-time high', published 9 September 2017. Accessed online 2 November 2017 at http://www.independent.co.uk/life-style/average-british-wedding-cost-uk-27000-hitched-venue-honeymoon-food-london-midlands-a7937551.html
ii. The Guardian: 'Cost of raising children in UK higher than ever', published 16 February 2016. Accessed online 2 November 2017 at https://www.theguardian.com/lifeandstyle/2016/feb/16/cost-of-raising-children-in-uk-higher-than-ever