www.nca.ie
Consumer helpline
1890 432 432
Baby
Steps:
A three stage plan for
expectant parents to
manage your money
4mm Spine
Contents
Introduction 3
Stage One: Planning for your baby’s arrival
Sorting out your money 5 5-step plan to control your
finances 6
Changing your spending habits 8 Money Saving tips 11 Working out how children affect
your pension 12
Considerations for unmarried, co-habiting and same-sex
partners 14
My to-do list 15
Stage Two: Money matters when you have children
Money planning 17 Preparing for unexpected
emergencies 19
Saving and investment
for life goals 19 Borrowing money and using
credit wisely 21
Money worries 23
Where can you go if you
have serious debt problems? 28 One parent families 30
Separation/Divorce 34 Illness/Family bereavement 37
My to-do list 42
Stage Three: Planning for your child’s future
Teaching your child good
money values 45
Opening an account for
your child 46
Saving and investing for
your child’s future 46 Planning to protect your
dependents 48
Life cover and other
protection/insurance products 50 Pensions and retirement
planning 53
Wills and estate planning 56
My to-do list 57
Useful Information
Jargon buster 59
Baby expense planner 64 Budget planner 66 Useful contacts 69 Your feedback and a
If you are planning to have children, big
changes are on the way, not least to
your personal finances. Having a baby
is wonderful though it has the potential
to be financially stressful. But you can
take steps to manage your money and
plan ahead to prepare for this important
life event.
3
Introduction
Your children will have different needs at certain stages of their
lives, so early planning and research is important to help you
cope with additional expenses.
While it may seem low down on your list of priorities at the
moment, spending a bit of time thinking about these things and
making plans will really pay off in the future.
The National Consumer Agency (NCA) is here to help you. Our
information is free, impartial and in plain English. We can give you
the guidance you need to understand financial products, so that
you can ask the right questions and make the right choices about
your personal finances and stay in control.
This guide is made up of a 3-stage plan to help you develop the
financial habits that can really make a difference in managing
your money if you’re starting a family and/or planning for
the future. It covers a range of practical personal finance
topics relating to having a family. Some of these you will need
immediately and some you may need as your family grow and
their needs change.
Throughout this guide you will see words highlighted in
bold and underlined in orange. This means that there is an
explanation in the Jargon Buster on page 59. You will also find
a list of useful contacts and websites on page 69. This includes
the NCA’s website
www.nca.ie
which has personal finance
tools designed for you – such as cost comparisons, calculators,
shopping around checklists and budget planners. If you don’t
have a computer you can get free access at your local library.
Stage One:
Planning for your baby’s arrival
Your bundle of joy can also bring big
expenses, even before he or she is
born. Spending a bit of time planning
your finances before your baby arrives
will really help you prepare for the cost
of pregnancy and beyond.
5
Stage One: Planning for your baby’s arrival
Sorting out your money
Having a baby means making lots of changes, including
decisions about your finances. You will need to consider
things like:
1.
Medical costs: this will depend on whether you choose
public, private or semi-private care. If you have private health
insurance, review your policy entitlements under maternity
cover;
2.
If employed, taking additional unpaid maternity leave or
changing your working arrangements after your new arrival;
3.
Increased spending before and after your baby’s arrival,
e.g. maternity clothes, baby equipment, clothes, baby food,
nappies etc;
4.
Ongoing large costs such as childcare;
5.
Future costs, for example for your child’s education; and
6.
Emergency fund savings.
In this part of the guide we will look at how to manage your
finances effectively during your pregnancy and beyond by
looking at how having a baby will affect your income and
expenditure. We will also discuss money saving tips to make the
most of the money you have.
5-step plan to control your finances
Having a baby is a very emotional and happy time. However, it
brings new pressures on your finances. In the current economic
climate it is more important than ever that you know how to
budget and plan ahead for your children’s future. The best time
to start this is before your baby is born, so you have time to
prepare for the financial changes and can start to form good
money habits, which in turn you can pass on to your children.
Use our 5-step plan to control your finances:
1.
Keep a spending diary – Record everything you spend
your money on each day, for four weeks. This will show what
you are actually spending your money on so your new baby
friendly budget will be more accurate. There may also be
things that you are spending money on unnecessarily and
can cut back on if you need to.
2.
Complete an income and expense check – If you have a
bank account you can use the information on your statement
to track money coming in and going out.
3.
Identify your personal goals – You may want to set a short
term goal such as paying for baby-related expenses, more
information on setting goals is on page 19 of this guide.
Stage One: Planning for your baby’s arrival 7
4.
Prepare a 12 month budget plan – Examples of items you
may include are on pages 64-68. Make sure you include
your additional income from child benefit and consider any
other benefits you may have in the next 12 months. If you are
working, you should check your contract with your employer
to find out exactly what pay you will receive when you are on
maternity leave and the impact, if any that maternity leave
may have on your other employee benefits. Make sure to also
factor in unpaid maternity leave if you are considering this.
5.
Keep your finances under review – Regardless of your
circumstances, you should review your financial situation at
least once a year and this is even more important when your
financial situation has settled down after the birth of your baby.
Tip!
Our website
www.nca.ie
also has a yearly budget
planner and a baby budget planner on
Changing your spending habits
How did your budget look? If you have more money going out than
coming in, you’ll probably end up using your savings or building
up debts. Consider how you can better control your spending.
Everybody can do with some tips on saving money, especially when
you are preparing for a new baby – here are some helpful ideas and
tips to help you make the most of what you have got!
1. Paying off your debts (if you can afford to)
Paying extra off your loans or credit cards could save you money
in interest. Consider paying off debts with the highest interest
rate first. The example below shows how this works. Always
check with your provider first to make sure there is no charge for
repaying your debts early.
Savings/debt Interest earned/paid in a year
€1,000 savings – interest rate 3% €30 earned on your savings €1,000 credit card debt – interest
rate 19%
€103 added to your debt
Use our loan calculator on
www.nca.ie/nca/loan-calculator
to see
how much you could save if you reduce the amount you owe.
If you are having trouble repaying your debts, read our Money
Worries section on page 23, which includes an action plan to help
you take control of your debts.
Tip!
Before you use your savings to pay off your debts,
think about whether you should keep some money
for an emergency fund, to help you deal with unexpected
events – see page 19 for more information.
Stage One: Planning for your baby’s arrival 9
2. Reviewing your income
If you are employed;
Currently, all female employees in Ireland, no matter how long
they have been working, are entitled to take maternity leave for a
period of 26 weeks.
Your entitlement to pay during the basic 26 weeks maternity
leave depends on the terms of your contract of employment.
Employers are not obliged to pay women on maternity leave.
You may qualify for Maternity Benefit from the Department
of Social Protection providing you have sufficient PRSI
contributions (see
www.welfare.ie
for more information). In some
cases your maternity benefit will be paid to your employer and
they will continue to pay you your wages. If this is the case
you may be entitled to a tax and PRSI refund, you can see
www.revenue.ie
for more information and talk to your employer.
Tip!
You may be entitled to a tax refund if you have
changed your working arrangements, for example
by moving to part-time employment, job sharing, or
taking unpaid maternity leave. You can get more information
on the Revenue website
www.revenue.ie
You can also avail of an additional 16 weeks unpaid maternity
leave. Generally during unpaid maternity leave, you are not paid
by your employer and you do not receive Maternity Benefit. But
your tax credits may accumulate if you take unpaid maternity
leave, so you should check this with your employer.
If you are not in employment;
If you are pregnant and receiving Jobseekers benefit you
may continue to get this throughout your pregnancy. You are
considered capable of work unless you have complications
during your pregnancy or you are ill. You should inform your local
social welfare office that you are pregnant. For more information
on entitlements and on signing on in pregnancy, see
www.welfare.ie
and
www.citizensinformation.ie
Everybody
Child benefit
Currently, whether you are working or not you are entitled to
claim Child Benefit. This payment is payable to the parents or
guardians of children under 16 years of age, or under 18 years of
age if the child is in full-time education.
If you are having a baby in Ireland there are various benefits and
entitlements relating to both employment and social welfare you
may be able to avail of depending on your circumstances. It is
important to be aware of the various supports available. Rates
payable and more information is available on
Stage One: Planning for your baby’s arrival 11
Money saving tips
Baby-related items
•
Shop around for baby equipment before buying as prices can
vary significantly from one shop to another.
•
Look online for deals on used items and auction websites
such as eBay (see our online shopping FAQs
www.nca.ie/
nca/shopping-from-home
for tips if you are buying online).
•
Think about borrowing pre-owned items from friends and
family members who may have clothes and equipment that
are still in very good condition.
•
Consider asking friends and family to buy gifts from your list of
baby essentials.
•
Consider registering for free samples and coupons – you can
find more information in your free maternity information pack.
•
Deal websites often have baby related offers. See tips for
using online deal websites on
www.nca.ie/nca/deal-websites
•
Use parenting and other websites that have classified
sections to buy/sell/swap baby equipment, which may be
worth investigating such as
www.eumom.ie
,
www.rollercoaster.ie
,
www.weddingsonline.ie
,
www.jumbletown.ie
,
www.magicmum.com
,
www.donedeal.ie
Tip!
Think about the size of clothes and nappies you
need, babies grow very quickly so don’t buy too
many ‘newborn’ sizes – also remember that friends/family
may give clothes as gifts.
General
•
Cancel any unwanted subscription services (for example will
you or your partner have time to use that gym membership
once your baby arrives?).
•
Save on your utility and phone bills. Check out the energy
saving tips on
www.seai.ie/power_of_one
to help you cut
costs. And
www.callcosts.ie
has useful tips to help you save
on your phone costs.
•
Our money saving tips section on
www.nca.ie/nca/money-saving-tips
has information
about ways to save money on your groceries.
•
Cut back on non-essential/luxury items. Remember to be
realistic – don’t cut out all your extras because if your budget
is too tight it will be harder to stick to.
•
Check out our Economiser tool on
www.nca.ie/nca/economiser
.
The Economiser analyses your spending in key areas, such as
groceries, energy, mobile phones and will show you how much
you are spending compared to others with a similar profile to
you. It then gives you helpful tips on how to reduce your bills.
Working out how children affect your pension
Having children is likely to affect your income and, as a result
your pension. If you change your work arrangement, for example
take a career break, move to part-time employment, job share,
or take extended maternity or adoptive leave, these could impact
on your benefits.
Stage One: Planning for your baby’s arrival 13
If you change your working arrangements
Employer pension plan
Ask your employer what effect, if any, your new working arrangement will have on your retirement benefits. If you envisage a shortfall, for example due to taking a career break or working part time, you should consider topping up your benefits with
additional voluntary contributions (AVCs) or with
notional service purchase (NSP), if you are in a public sector superannuation scheme.
For further detail on NSPs from the Irish Civil Service Pensions Information Centre go to
www.cspensions.gov.ie
Personal pension plan
Some personal pension plans allow you to stop paying contributions for a time or to increase or reduce your contributions, although this may be subject to a minimum level of contribution and a charge. Personal Retirement Savings Account (PRSA)
With a PRSA you are free to stop, start, increase and decrease your contributions at any time, although your provider may require prior notice of a change. However, if you don’t pay into a PRSA for two years or more, and the balance is less than €650, then the PRSA provider can cancel your PRSA and refund the balance to you, less tax. The provider has to give you three months notice before doing this.
With all private pensions (Personal pension plans or PRSAs), the benefits you receive depend mainly on how much is contributed, so if you stop or reduce your contributions, you will end up with smaller benefits when you retire. Depending on your circumstances, you could top up your benefits with additional voluntary contributions (AVCs).
For further information on how having children can affect your
pension options, or to get an idea of how much more you will
need to save to meet your expectations in retirement, check out
the information and pensions calculator on the Pension Board’s
website
www.pensionsboard.ie
. You should also speak to your
employer, trade union, pension provider or a financial advisor.
Considerations for unmarried, co-habiting and
same-sex partners
Legislation came into effect on 1 January 2011, which in certain
areas, gives the same rights of married couples to same-sex
civil partnerships. Under this legislation, a court based redress
scheme (allowing you to apply for orders relating to property,
pensions, maintenance, etc) has been introduced for co-habiting
couples who meet certain criteria. This scheme has been
designed to protect financially dependent members of a couple,
if your long-term cohabiting relationship ends either through
death or separation.
•
Get more related information on the Citizens Information
website
www.citizensinformation.ie
and on
www.revenue.ie
•
Check your social welfare entitlements on the Department of
Social Protection website
www.welfare.ie
•
Life insurance and pension policies may provide a lump sum
or regular incomes to be paid to a nominated partner when
you retire or die. However some policies only provide this to
legally married couples or civil partnerships. So, if you are a
cohabiting couple, you need to check your policy document
or check with your provider.
•
Contact your solicitor to make a will, outlining provisions for
your surviving partner and family. If you are a union member,
check if your union offers a wills service for free.
Stage One: Planning for your baby’s arrival 15
•
Get advice from your solicitor/Free legal Advice Centre
(FLAC) (if you are buying a home), on which type of home
ownership to choose. This will impact on your ability to pass
on your share of your home to your partner (or other people)
should you die. You can get more information on the Citizens
Information site
www.citizensinformation.ie
If employed, talk to my employer about the impact of
maternity leave/adoptive leave on pay, pension and other
benefits.
Check out my entitlements from the Department of Social
Protection on
www.welfare.ie
Keep a spending diary.
Complete an income and expense check.
Draw up a budget (and include a plan for my period of
unpaid leave, if taking it).
Work out if I should/can pay off some debts.
Start a savings plan.
Make a plan to top up my pension benefits if I need to.
Stagger spending on big items like baby equipment.
Search for good deals.
My to-do list
Stage Two:
Money matters when you have children
As your family grows and your children
get older, the more they cost to feed,
clothe, educate and entertain. You
may also need childcare and when
your children go to school there will be
many expenses to take care of. Careful
planning will pay off and help you to
manage your money and stay in control.
17
Stage Two: Money matters when you have children
Money planning
Creating your family budget plan and managing new expenses
There are many predictable expenses that come with having
young children, such as nappies, equipment, childcare and school
expenses, which you will need to work into your family budget. So
it’s a good time to review your finances by completing a spending
diary and an income and expense check before you work out a
new budget. Make sure to keep your budget up-to-date as your
children grow and their needs change.
Tip!
Include a review of your overall household
spending – our economiser tool on
www.nca.ie
works out what you are spending compared to other
households on key areas such as groceries, energy and
mobile phones, as well as helpful tips on how to cut back.
Our cost comparisons on
compare.nca.ie
compare
banking products from the main providers and show you
how you can make savings. Get the best value and don’t
pay more than you have to. You may also be able to
negotiate discounts, particularly on insurance products.
A new addition can make it harder to keep control over your
budget, so to help you:
•
Use a weekly budget plan to help avoid unplanned spending;
•
Stagger your spend on annual and occasional expenses like
birthdays, Christmas, school uniforms and books, holidays,
car and house insurance, car tax etc;
•
Review your non-essential spending if you need to cut back,
making small adjustments in a number of areas can add up
and make a real difference – see pages 11-12;
•
Compare grocery and other costs across providers – take
advantage of promotional offers but only if they reduce your
shopping bill;
•
Teach your young children good money habits and help them
to see the difference between wanting and needing things
(see page 45 for more details); and
•
Limit yourself to one credit card, and always avoid using
credit to meet day-to-day expenses unless you know when
you will be able to pay it off (for example, if pay-day is just
around the corner).
Tip!
If you don’t have the resources to meet your
family’s day-to-day expenses without using a loan or credit
card, you could be facing serious debt problems in the
future. If you need help see pages 25-29.
Stage Two: Money matters when you have children 19
Preparing for unexpected emergencies
When you have a family it’s more important than ever for you to
build up an emergency fund to cope with unexpected expenses
such as doctor’s bills or significant car/home repairs. Having some
money put away could get your family through some hard times
if you lost your job or were unable to work because of illness or
disability. Aim to build up 3 months salary or more if you can, to
tide you over.
Think about putting some money into a savings account with an
interest rate that matches or beats the rate of inflation and resist
the temptation to dip into it. Use your budget planner to help you
identify where and how much you can afford to save. Use our
regular savings cost comparison on
compare.nca.ie
to compare
current rates and offers from the main providers in the Irish
market.
Saving and investment for life goals
In
Stage 1
, your main saving goal was to set aside enough money
to pay for once-off baby related expenses. When you have your
child, your next goal may be to save for occasional expenses such
as birthdays, Christmas, back-to-school or plan for your child’s
future. If you can, try to start now, by saving even small amounts
every week or month, as it will lessen the burden in the future.
Before you start to save, you need to decide how much you
can afford to put aside and for how long. The budget you have
prepared (see page 66) will help you see how much is left over to
put away. You can then set about drawing up your savings plan.
To do this, you need to decide on your savings goals. Examples of
goals for new parents are detailed below:
Short
Term Save for once off baby related expenses (equipment and necessities) 0 to 3 years Save for medical expenses
Save for bigger car
Medium Term
Save for home renovations 3 to 10 years Save for starting school costs, books,
uni-forms, etc
Long Term
Save for children’s third level education 10 years and over Pay into a pension to save for retirement
income
Once you know what your goals are, work out how much it will
cost. Once you have drawn up a budget plan you can work
out how long it will take you to build up the amount of money
you need and what you need to do to get it. For example, you
may need to start a regular savings plan, or adjust some other
spending so that you can pay extra off a loan each week or month
and clear it more quickly. If you decide to start a regular savings
plan take a look at our regular savings accounts cost comparisons
at
compare.nca.ie/regularsavingsaccount
to help you decide on
what product suits you best.
Stage Two: Money matters when you have children 21
Borrowing money and using credit wisely
Having a family can be a strain on your finances, so it’s not hard to
imagine why some families take on extra debt. But there are some
questions you should think about before you decide to borrow.
Some questions to think about before you borrow…
Do you need it? Complete our 5 step plan to control your finances – which is detailed on pages 6-7. You may simply need to readjust your finances by changing your spending habits and saving a small amount regularly.
How much can
you afford? Your new budget plan will help you work out how much you can afford to repay. Think about whether you could still afford to meet the repayments if you or your partner’s circumstances changed and you had to cope on a lower income. How much can
you borrow from your lender?
This will depend on your income and job security, whether you have savings, your credit rating, if you are borrowing on your own or with someone else and if someone will act as guarantor for you. How long should
you borrow for? Match the term of your loan with its purpose. For example, aim to pay back a holiday loan before your next holiday.
Tip!
You should check out the information on
www.nca.ie/nca/saving-investing
. If you find it
difficult to discipline yourself to put money aside, you might
consider using a standing order to pay into a separate
savings account so you don’t have to think about it.
What are the cheapest forms of credit and loans?
Check out our website www.nca.ie/nca/choosing-loan-products to get more information on the main types of credit available and the costs and benefits of each.
What are the cheapest forms of credit and loans?
Check out our website www.nca.ie/nca/choosing-loan-products to get more information on the main types of credit available and the costs and benefits of each.
Use our personal loan calculator on
www.nca.ie/nca/loan-calculator to work out the cost of loans with different rates and terms. How will you plan
your repayments? Make sure to adjust the family budget to incorporate repayments. Are you borrowing
to meet your family’s day-to-day expenses?
Credit cards and loans are generally not suitable for funding day-to-day expenses, unless you know when and how you can pay them off.
Do you fully understand the terms and conditions of the credit or loan?
Make sure you understand how much interest you will be charged and what could happen if you miss or are late with repayments.
Note!
If you miss repayments, fail to clear a loan or credit
card or settle a loan for less than you owe, it will show
up on your credit record for five years after the loan is
closed. This may affect your ability to get a loan in the future
or could force you to borrow from lenders who charge higher
interest rates. You can request a copy of your credit record for
a small fee by contacting the Irish Credit Bureau (see
www.icb.ie
). If there is a mistake on your credit history
you can request that your lender corrects it.
Stage Two: Money matters when you have children 23
Money worries
It is not something that anyone wants to think about, but if
something unexpected were to happen to you or your partner,
wouldn’t you like to know that your family would be looked after
financially?
The following section relates to information you may need if
your circumstances have changed due to a drop in income,
bereavement, separation etc. You might not have the need to
read this information now, but keep it as a handy reference,
should you need it another time.
Dealing with a drop in income
Your income might fall for many reasons and you may be facing
uncertainty about what the future holds, however you can take
control of your finances to prepare for a sudden drop in income if
the worst happens.
Our Family budgeting section on pages 17-18 and our
information on
www.nca.ie/nca/losing-your-job
may help you
think about ways to cut your spending, prioritise your bills and
maximise your income.
If you are having difficulty making ends meet there is support
available.
•
Contact your lender as soon as possible if you’re having
difficulty meeting loan or mortgage repayments. There
are options that you can discuss which make your loan
repayments more expensive in the long term but more
manageable in the short term such as payment breaks,
interest only or other lower payments; or increasing the term
of your loan/mortgage. See pages 27-28 for more information
on the Central Bank Mortgage Arrears Resolution Process
(MARP).
•
Use our Managing your money section on
www.nca.ie/nca/
managing-your-money
for tips on managing your money.
•
You can get career advice and practical information about
employment from FÁS on
www.fas.ie
•
If you have serious debt problems, have a look at the Dealing
with debt section on the next page which includes an action
plan telling you where to start.
Tip!
Check if you have
Mortgage Repayment
Protection
or
Payment Protection Insurance
.
This may cover some or all of your mortgage or
loan repayments for a certain time (usually a year) if
you’re unable to work due to an accident, sickness,
hospitalisation or compulsory redundancy.
Stage Two: Money matters when you have children 25
Dealing with debt
The strain of dealing with debt can have a very bad effect on
family life. The most important thing to do is to take control
as early as possible and the action plan below tells you where
to start.
Action Plan
Step 1
Make a list of all your current debts
List your debts in order of priority, starting with your mortgage or rent, and utility bills. You need to pay these first because you could be at risk of losing your home, being evicted or your gas or electricity may be disconnected.
•
Then look at your other debts such as credit card debt, overdrafts and personal loans. List your debts in order of the highest annual percentage rates (APR). The rates should be on your statements. The highest APR loans should be paid after your mortgage or rent and utility bills.Action Plan Contd.
Step 2 Make a new budget/check your entitlements
Revisit our Sorting out your money section on page 5 – this will help you work out how much you can afford to repay each week or month and how you can spread your money to get more from it.
•
Make sure you are claiming all that you areentitled to. If your circumstances have changed since having a family, for example cutting back on work to look after the new baby, redundancy or short-time working, you may be eligible for mortgage interest supplement, family income supplement, other occupation related tax relief and more.
•
The following websites are good starting points: – Revenue Commissioners –www.revenue.ie
– Department of Social Protection – www.welfare.ie
– Citizens Information Board – www.citizensinformation.ie Step 3
Contact your lenders to discuss your options
If you are worried about your repayments, contact your lender as soon as you can to explain your situation. Have all of your facts and figures to hand – including your list of debts, rates and how much you still owe.
•
Outline to your lenders how much you can afford to repay each week or month using your family budget.•
Discuss options your lender may allow including:debt consolidation, payment breaks, or extending the term of your loan. This will make your loan more expensive in the long term, but it will make things more manageable for you in the short term. Read up on the options then contact your lender immediately.
Stage Two: Money matters when you have children 27
If you are in home mortgage arrears
If you are having difficulties meeting your mortgage repayments or
think you will in the near future, your first step should be to contact
your lender as soon as possible to discuss your situation. Your
lender must have a specially trained person in each branch to deal
with your case and any meetings between you and your lender to
discuss your situation must be conducted in private. If you would
feel more comfortable and need some support, bring a relative
or friend with you to discuss your mortgage arrears situation with
your lender.
Since 1 January 2011, all lenders must have a “Mortgage
Arrears Resolution Process” (MARP) in place. This sets out how
your lender must communicate with you, provide information
to you, assess your mortgage arrears situation, come to a
resolution and manage appeals. Your lender must give you
a copy of the Mortgage Arrears Resolution Process which is
a booklet of related information, or refer you to their online
information. You can get more information on the Central Bank
of Ireland’s website,
www.centralbank.ie
Your mortgage lender will:
•
ask you to complete a standard financial statement with
your information; and
•
assess your case (through your lender’s Arrears Support
Unit) and decide whether or not to offer you an alternative
repayment arrangement.
If they do not offer you an alternative repayment arrangement
your mortgage lender must notify you of:
•
the reasons why in writing;
•
other options available to you;
•
your right to appeal to your lender’s Appeals Board.
If you cannot pay a car finance or car loan
If you are having problems making your car repayments,
your options depend on what type of finance agreement you
have. Your ability to end the agreement and how much you
owe will also depend on how much you have already paid off.
You can get more information on your options on
www.nca.ie/nca/car-finance-debt
Where can you go if you have serious debt problems?
If you find yourself struggling with debts, you may need help
in trying to regain control as quickly as possible. The Money
Advice and Budgeting Service (MABS) is Government-funded,
and is the only impartial, free, independent and fully confidential
service in Ireland, providing one-to-one advice to people
Stage Two: Money matters when you have children 29
The MABS’ process for dealing with debt is widely recognised
for being comprehensive and fair in working with clients to
manage their commitments. For more information:
•
log onto MABS’ website,
www.mabs.ie
•
call their helpline on 0761 07 20 00; or
•
drop in to one of their 53 offices nationwide to speak to a
MABS advisor.
There are other organisations that can offer you support if you
are in emotional distress, including the Samaritans. For more
information:
•
Log on to
www.samaritans.org
•
Call 1850 60 90 90
Commercial debt advice or debt management companies
These are commercial companies that can try to re-negotiate
lower loan repayments with your creditors on your behalf in
exchange for a fee. These fees can be high and could make your
situation worse. They do not require permission to operate and
are not regulated (correct at the time of print). Any money you
give to a debt management company is not protected.
Note!
Debt advice firms cannot guarantee a successful
outcome for your case. They can only negotiate on
your behalf. Even if you are paying fees to a debt
management company, your lender could still progress
your case through the usual legal channels if you continue
to default on your loans.
One parent families
If you are a lone parent, managing money can be more difficult.
You may prefer to stop working or go part time using parental
leave when you have children, or you may have little choice. But
there is help available to deal with the financial pressures you
may be facing.
Budgeting
With only one income, having a realistic and well-planned budget
is even more essential. Making a budget and sticking to it will
enable you to pay close attention to how you spend money
to make sure you have taken steps to take care of day-to-day
needs and longer term financial goals. There are lots of useful
money saving tips included in
Stage 1
of this guide on pages
11-12.
Benefits and entitlements
As a single parent, you are entitled to a range of benefits and
allowances, depending on your circumstances. Log on to
www.welfare.ie
or
www.citizensinformation.ie
for more
information and see our useful Action Plan on the next page.
Stage Two: Money matters when you have children 31
Action Plan
Check out your entitlements
You may be entitled to benefits which you are not claiming, such as those listed below:
•
One-Parent Family Payment (OFP).•
Family Income Supplement.•
Early Childhood Care and Education Scheme (ECCE).•
Fuel Allowance.•
Supplementary Welfare Allowance Scheme.•
Medical card.•
GP visit card.The Parenting alone section of the Citizens Information website www.citizensinformation.ie and the Department of Social and Family Affairs website www.welfare.ie have full information on what benefits and entitlements you are entitled to claim as a lone parent.
If you are finding it difficult to meet the extra costs of your kids returning to school, you may be entitled to a back-to-school clothing and footwear allowance.
Are you are claiming all the tax entitlements you can?
•
This can include mortgage interest relief, union subs, medical costs, annual transport tickets etc.•
The Revenue website www.revenue.ie is a good starting point, or contact your local Citizens Information Centre.•
www.citizensinformation.ie•
You may also be entitled to back-claim for previous years.Action Plan Contd.
Have you sought maintenance from your child’s other parent?
In most cases, it is the parent with main custody of the child who may look for child maintenance. If you and your child’s other parent cannot come to an agreement about maintenance you may apply to the court to order the other parent to pay child support. You can contact your nearest Citizens Information Centre for more information or log onto www.citizensinformation.ie
The Free Legal Advice Centres (FLAC) have produced a number of useful information leaflets which can be downloaded from the FLAC website www.flac.ie
Getting help
There are a number of organisations out there that can help with
information, advice and support services if you are a lone parent:
OPEN
The national network of one-parent family support groups. OPEN
assists member groups in providing information, services and
supports for one-parent families.
www.oneparent.ie
Telephone: 01 814 8860
Stage Two: Money matters when you have children 33
Onefamily
Provides direct training, support and information to one-parent
families. They also lobby policymakers to ensure equality for
one-parent families in Ireland. If you are concerned about anything,
from social welfare to parenting issues, or you are thinking about
getting back to education or work, get in touch for advice and
support. Besides offering a listening ear, they can also refer you to
local services in your area.
www.onefamily.ie
LoCall: 1890 662 212
Email: [email protected]
Treoir
The national federation of both statutory and voluntary agencies,
which provide information and other services for unmarried
parents. Their information pack is available to download at
www.treoir.ie
or may be ordered free of charge from Treoir. The
pack provides key information on guardianship, access, custody,
being single and pregnant, one-parent family payment and
cohabiting parents.
www.treoir.ie
LoCall: 1890 252 084
Free Legal Advice Centres (FLAC)
Provides legal information to the public including access to free
legal advice centres and legal information leaflets explaining such
issues as separation, maintenance, wills, probate, enduring power
of attorney and maternity leave.
www.flac.ie
Separation/Divorce
Separation and divorce can have huge implications for your
personal finances, including:
•
dividing assets and debts;
•
managing post-divorce budget (including child maintenance);
•
reviewing retirement benefits/life insurance/health insurance;
and
•
updating your will to revise beneficiaries etc.
Tackling your finances as soon as possible can help you take a
positive step towards getting your life back on track. Consider
the following steps:
Action Plan
Make mortgage matters a priority
•
Contact a solicitor for advice on dividing your home, dealing with mortgage issues and dividing the contents of your home.
•
If you want to stay in the house and take over the mortgage by yourself, you will need to apply for a mortgage in your own name. It is not possible for the other party to just take themselves off the mortgage and you both are liable for the mortgage even if one person moves out/stops paying.•
If your home is in negative equity, you need to discuss your options with your former partner and your lender.Complete a financial health check
•
You will need to complete a personal finance overhaul now that your circumstances have changed.•
Use the Sorting out your money section in Stage 1, page 5 to help you.Stage Two: Money matters when you have children 35
Action Plan Contd.
Make a proper
budget
•
You will need to get used to new income and spending patterns. To help, review your family budget and make changes to manage your post-divorce budget. Revisit the section on our family budgeting section on page 17 for help on drawing up a revised budget. Splitting your joint
finances
•
If you have a joint bank account, the first thing you will need to do is pay off any outstanding household bills from this account.
•
You also need to agree whether you will close your joint account and split any money in it, or whether one of you will keep the account.•
If you are going to keep the account open,contact your bank in writing asking them to change the account into one name. Both parties will have to sign this letter.
Sort out maintenance payments
•
In most cases, it is the parent with main custody of the child who may look for child maintenance.•
If you and your child’s other parent cannot come to an agreement about maintenance you may apply to the court to order the other parent to pay child support.Review your insurance and other policies
•
It’s also a good idea to review your insurance policies as you may need to amend an existing policy or take out a new one.•
For example, if you have a joint life insurancepolicy, you will need to consider if you still need it and decide how you pay the premiums.
Action Plan Contd.
Dealing with your
debts
•
Consider any outstanding non-mortgage debts that you and your former partner hold jointly, including any credit cards, loans or car finance agreements. Talk to your solicitor if you need to.
•
If your debts are in joint names, you are jointly responsible for them and missing repayments will affect your credit rating.•
List out all the debts and decide who is to pay what.•
Contact the lenders and let them know what you have decided to do.•
If debts are not met, a lender can take you both to court.The Family Mediation Service offers support to separating
couples in negotiating an agreement for separation, including
the financial aspects such as maintenance as well as a shared
parenting plan. See the information on family mediation
service under the Services section on
www.fsa.ie
. The Citizens
Information website
www.citizensinformation.ie
also has a
section on separation and divorce which has information
including legal options following marital breakdown, applying for
divorce, family home, guardianship and a lot more. You can get
more information on personal finances and your rights on our
site
www.nca.ie
Stage Two: Money matters when you have children 37
Illness/Family bereavement
Unfortunately, family illness and bereavement requires making
financial decisions. Find out what assistance is available to you
to help you through this difficult time.
Family illness
If you or your partner is faced with illness, you should consider
taking the following steps:
Action Plan
Check out your entitlements
Find out whether you are entitled to some of the following benefits or assistance:
•
Medical Card•
GP Visit Card•
Mobility/disability allowance•
Invalidity pension•
Illness/injury/health and safety benefit•
Drugs payment scheme•
Long term illness scheme•
Treatment benefit schemeContact the Department of Social Protection www.welfare.ie to find out what types of social insurance and social assistance you may be entitled to if a family member is sick. You can also get information from your local Social Welfare Office.
Action Plan Contd.
Insurance If you or your partner have become ill or had an accident, check through your insurance policies to see if you can make a claim that will pay out a lump sum for the type of illness (for example critical/serious illness cover) or that will provide a taxable income if you can no longer work due to illness (for example income protection/ permanent health insurance).
•
You should also let the insurance company know of any changes to your or your partner’s medical condition, as it may affect any claim you might need to make.•
If you are travelling, check your policy – you may have medical cover.Pension
•
Some employers provide an enhanced ill-health pension for their employees if they have to retire early due to bad health – you should check with your employer what your entitlements are.•
Check your retirement benefits – they may be lower because your contributions to your pension are stopping early and the money in your pension fund will have to last longer.•
You may be able to draw on your personalretirement savings account (PRSA) or
personal pension plan if your situation is more permanent.
Stage Two: Money matters when you have children 39
Action Plan Contd.
Working while caring for an ill relative
Find out if your employer can help you, for example by allowing you to work flexibly. You may be entitled to Carer’s leave or special leave arrangements.
Tax
•
Check to make sure you are paying the right tax. Contact the Revenue Commissioners on www.revenue.ie (list of lo-call local numbers available on their website).•
Notify the Revenue Commissioners of any changes to your situation. For example if your partner is ill and can no longer work, this may affect how much tax you pay.Dealing with family finances
You may have to manage on a lower or single income, if you or your partner is unable to work due to illness. Use the section on Family budgeting on page 17 for help on drawing up a new budget.
Tip!
The Citizens Information website
www.citizensinformation.ie
has a dedicated ‘Health’
section that has lots of information on healthcare in Ireland
and includes information on children’s health.
Family bereavement
The Citizens Information Board
www.citizensinformationboard.ie
has an information guide on bereavement which deals with the
practical and material matters that arise following a death and a
list of agencies that may be able to help you with support and
counselling.
The table below outlines some things to consider during this
difficult time.
Action Plan
Make sure you can access your accounts
•
If the deceased person’s money is in a joint account it is easier to get access, although you may have to await the grant of probate.•
Money in other personal accounts are usually part of the deceased’s estate and are distributed in the normal way.Assess the tax implications
•
If your partner dies you will need to let Revenue know as it may affect how much tax you pay.
•
The executor or administrator of your partner’sestate will sort out the deceased person’s tax affairs.
•
Contact Revenue on www.revenue.ie (list of lo-call local numbers available on their website). Contact solicitorand executors to administer the estate
•
Contact solicitors directly about the deceased person’s estate.•
www.citizensinformation.ie has information on the rights a person may have to a portion of the deceased person’s estate. This depends on whether or not they have made a will. See page 56 for more information on wills and estate planning.Stage Two: Money matters when you have children 41
Action Plan Contd.
Rework your
family finances
•
Look at the list of family bills and other day to day matters to ensure everything is covered, if certain financial affairs were previously looked after by your partner.
•
Review your insurance cover to make sure you and/or your family still have appropriate cover through existing policies. Take out new insurance cover where needed.•
Check the Department of Social Protection website www.welfare.ie or your local Social Welfare Office to make sure you are receiving all the financial assistance/benefits you are entitled to. They can include:– bereavement grant;
– death benefits under the Occupational Injuries Scheme;
– payment for six weeks after death; and – payments for widowed people
•
When you have the time, you should revisit the family budget and work out a new budget to take account of your changed circumstances. Use the section on Family budgeting on page 17 earlier in this stage for help on drawing up a revised budget.Review your Life Insurance policy
•
If an insurance policy names you as the beneficiary, then you may claim it directly from the insurance company. You will need a death certificate.
•
If there is no named beneficiary, then the proceeds of the policy form part of the overall estate of the deceased and are distributed with the other assets.Action Plan Contd.
Check any occupational and personal pensions
•
If the deceased was a member of anoccupational pension scheme, you should contact the employer or former employer or the scheme administrators to find out if there is a pension for the spouse and/or children.
•
If the deceased had a personal pension, thevalue of their plan passes on to their estate for the benefit of their dependents, depending on the rules of the plan.
•
You can get more information on pensions on www.nca.ie/nca/pensions or on the Pensions Board website www.pensionsboard.ieRevise your family budget.
Start a weekly/monthly saving plan, including an
emergency fund.
Start planning to protect you and your family against drop
in income, illness, bereavement or other changes in family
circumstances.
Stage Three:
Planning for your child’s future
When you have a family looking ahead
and planning your finances into the
future is more important than ever.
This stage of the guide gives you some
pointers about the importance of
planning to protect and provide for your
own and your family’s future.
45
Stage Three: Planning for your child’s future
Teaching your child good money values
If you can, take the time to teach your children how money
works, why to save it, and how to make the best of it – just
as we have outlined in
Stages 1
and
2
. By doing this you are
passing down important information that will instil good attitudes
and money habits from a young age. Make it relevant to them in
practical ways, for example:
•
Show them how to save for a bike or computer game. Get them
to estimate how much it is and how long it would take to save for
it, based on how much they get for pocket money. Have a look
at the saving goal technique on pages 19-20 to help you.
While it can be hard to say no at times, try to encourage your
children to see the difference between what they ‘need’ and
what they ‘want’, helping them to spend wisely. When your
children are old enough, you could involve them in discussions
about household budgeting decisions and how to prioritise
between what is most important and those things that are
optional. Make sure you do this in a way that is positive and
does not cause them worry.
Any good habits that you pass on to your children will help them
become money smart and this will benefit them enormously
throughout their lives. It will also pay off for you by managing
their expectations as they grow up and as they reach their teens.
Opening an account for your child
At this point, you might like to consider opening an account for
your child in a bank, credit union or An Post, to start them on the
right path. When your children reach the right age (and if you can
afford to) give them a small amount of money as pocket money.
•
Accounts for children are usually simple, easy to use and have
no charges. You can open them with a very small amount of
money, often as little as €1.
•
Accounts for secondary school students usually offer ATM cards,
but you have to keep the account in credit at all times and they
offer no loan or overdraft facility. There is a limit to how much
you can withdraw and typically you will not have to pay fees and
charges.
•
Student current accounts (third level) offer many of the same
benefits as ordinary accounts, such as ATM and debit cards but
they are also usually free of charges.
•
As with a ‘grown-up’ account, make sure you shop around for
the best interest rate on offer, using our cost comparisons on
compare.nca.ie
Saving and investing for your child’s future
Your children’s education is perhaps the largest expense you
have to plan for, so you need to set aside some money in your
budget and explore your savings and investment options. You
could open a regular savings account, with a good rate – the
higher the better, and put money aside each month (perhaps
some of your child benefit if you can afford it).
Stage Three: Planning for your child’s future 47
Product Description For more information
Savings and deposit account
These accounts can vary depending on: • how often you want
to deposit money; • how much access
you want to have to your money; and • how much interest
you want to earn.
Visit our section on www.nca.ie/nca/choosing-savings-investments and you can also compare features and costs for regular savings and lump sum deposit accounts at compare.nca.ie
State savings schemes
The National Treasury Management Agency (NTMA) has a range of personal savings products. An Post act as an agent of the NTMA, offering savings and investment accounts through its post offices in Ireland. These include: • deposit accounts; • savings accounts including regular monthly savings accounts; and • fixed rate/term products such as savings certificates and savings bonds.
Visit www.nca.ie/nca/ statesavings and
Or you could consider an investment product (where there
may be some risk in return for higher possible growth on your
money). There is lots of information available on our website at
www.nca.ie/nca/saving-investing
. Before you make a decision,
you need to think about what access you would like to your
money and what level of risk (if any) you are prepared to accept.
Planning to protect your dependents
When you are a new parent, you need to provide for your family
today but you also need to protect them into the future. It’s a fact
of life that accidents happen and sometimes they are expensive
to fix. When you are a new parent with young children to take
care of, paying for damage to your home or your car is another
expense you don’t need. Your health can also come under
pressure and this can affect your ability to earn a wage.
Insurance products can help to limit the financial impact that
accidents and your family’s health can have on your family
budget. The table below outlines the typical types of general
insurance needs that an average family might have.
Product Description For more information
Home insurance
Depending on the type of cover, home insurance can cover damage to your
buildings, contents, loss or damage to valuables even when outside your home and injury to other people in or around your home.
Visit www.nca.ie/nca/ home-insurance and also www.nca.ie/nca/getting-insurance-quotes for tips and information on getting insurance quotes.
Stage Three: Planning for your child’s future 49
Product Description For more information
Motor insurance
Depending on the type of cover, car insurance can cover damage caused by your car to other people’s cars and property and injuries caused to other people. It can also protect against damage to your car caused by fire or theft. You can also cover damage to your own car, property and items stolen from your car.
Visit www.nca.ie/nca/ car-insurance and also www.nca.ie/nca/getting-insurance-quotes for tips and information on getting insurance quotes.
Payment protection insurance (PPI)
Covers your repayments on a loan or mortgage for a certain period of time if you suffer from an accident, illness, death or compulsory redundancy, depending on the policy. Many policies only cover you for one year.
Visit www.nca.ie/nca/ payment-protection for information on costs and considerations before you buy.
Travel
Insurance Covers you against some losses while you are travelling such as damaged or delayed luggage, cancelled flights, delayed or missed departures, loss or theft of money or passport and illness or injury.
Visit www.nca.ie/nca/travel-insurance for information on costs and considerations before you buy.
Life cover and other protection/insurance products
It is just as important to insure your health and your life, as it is to
insure your belongings. If you need to undergo routine or more
expensive medical procedures, these can cost a lot of money. If
your health prevents you from earning a wage to support your
family or if you are no longer around to help, you need to protect
your dependents against a drop in income.
Check with your employer what insurance you can get through
your job or pension scheme. Some schemes have a death in
service benefit that pays out if you die during your working life.
The following are health and life insurance products that can help
protect your family against health related problems.
Tip!
Shop around for your insurance quotes every time
you renew. Our online checklists will help you and
are available at
www.nca.ie/tools-calculators
Stage Three: Planning for your child’s future 51
Product Level of cover/
main benefits Exclusions/ restrictions For more information Private health
insurance Covers all or some of the cost of certain private and semi-private medical treatments, depending on the level of cover you choose. Cover is ongoing once policies are renewed on time. Pre-existing illnesses may be excluded or restricted and you may have a waiting period before your cover is activated. Visit www.nca.ie/nca/ health-insurance for information on getting the right cover, the types of cover available and who provides this insurance. Income protection/ Permanent health insurance Provides you with a taxable income if you lose your work income due to disability/illness or injury. The benefit is paid out for a certain period of time – usually until you get better or reach retirement age. Your age, gender, health, family medical history, income and occupation will affect your eligibility and cost. You must be in full-time paid work or be self-employed to get and continue to have income protection cover. Visit www.nca.ie/ nca/income-protection for information on eligibility, cost and how this insurance works.
Product Level of cover/ main benefits Exclusions/ restrictions For more information Serious/ Critical illness insurance
Pays out a tax-free lump sum if you are medically diagnosed with one of the serious illnesses or disabilities that your policy covers.
Eligible illnesses and exclusions will be listed in your individual policy and will vary between providers. Your age, gender, health and family medical history will affect your eligibility and the cost. Visit www.nca.ie/ nca/serious-illness-insurance for information on buying this insurance, cost and what is covered etc. Mortgage protection insurance A type of life insurance policy that repays your mortgage if you die before clearing the loan.
Your age, gender, health and family medical history will affect your eligibility and the cost. Visit www.nca.ie/ nca/mortgage-protection for information on types of mortgage protection, what benefits you get etc.
Life insurance Pays your estate either a lump sum or regular income if you die during the time limit set out in the policy. The cover is either whole of life or for a specific term. Your age, gender, health and family medical history will affect your eligibility and the cost. Visit www.nca.ie/nca/ life-insurance for information on cover, benefits and costs etc.
Stage Three: Planning for your child’s future 53
