Savings accounts to help with your new arrival

Savings accounts to help with your new arrival

If you're planning on starting a family, one of the most important considerations you'll have to make is if you're going to be financially stable enough to cope with the extra expense involved. If this is the case, you may have already come to the conclusion that saving sooner rather than later is the best way forward.

Of course, this is absolutely the case. But being sensible with what you have and preparing for all the potential expenses you will face later are not necessarily easy tasks. Therefore, it's essential to approach both realistically. In addition to the cost of having an extra mouth to feed, you'll need to have money available for things like clothing, toys, medical bills and all kinds of other things. Undoubtedly, this is likely to have a serious impact on your cashflow, especially if you've had a reduction in your earning power because of paternity or maternity leave.

This might lead you to think about how you can get hold of the best savings rates available and make your money work harder - as this will better equip you for the future. Young couples who are in the early stages of planning a life together may want to look at how a fixed rate ISA will give them a stable return. If, on the other hand, you're looking towards having a family over a much longer-term, a variable rate option might be worth looking at.

Either way, you'll want to make sure you make use of the full ISA allowance available to you, which from April 2010 became even more attractive to potential savers. From this date onwards, the amount any eligible consumers over the age of 16 can put into a cash ISA was raised to 5,100. If you do reach this cap you'll also still have the same amount available to put into a stocks and shares option. Of course, if you are more adventurous, the whole 10,200 can be placed into the latter. The term of this investment could be longer than two years though, so it will really depend on your needs as an individual.

But if the pitter-patter of tiny feet is expected sooner than you'd planned, you may find your situation changes quite quickly and you need your financial plans to reflect this. In this instance an ISA can still prove useful in protecting your future. But at this stage you may also want to consider the benefits of a child trust fund. This can be a great way to maximise the amount available to your child when they reach 18 and have their own financial obstacles to face. A government voucher scheme means that this gets up and running when the baby is born and is credited again on their seventh birthday.

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