It’s easy to forget to take care of yourself when your priority is raising young children – naturally, they come first.
The responsibilities that come with motherhood are such that everything else takes a back seat, at least for a while. That includes money matters – but when it comes to personal finances, there are certain things you shouldn’t put off. So, we whittled down the long list of money matters that mums should put on their to-do list to five moves in particular:
Pay into a pension
When it comes to saving for old age, women are at the highest risk of pensioner poverty. The average woman retires with pension savings of £69,000, compared with an average of £205,000 for men, according to the 2024 Gender Pensions Gap report. It said that childcare and other factors mean women are affected by career gaps averaging ten years, with the result being an average of £39,000 in lost pension savings.
If you are working, then join your workplace pension scheme – by opting out, you are essentially saying no to free money, because when you pay in, so does your employer. You also get tax relief on your payments, which is another slug of free money.
If you are self-employed, or even a stay-at-home mum, then saving for a pension is still important. If you have no earnings, ask your partner to contribute into a personal pension arrangement for you – it is only fair if you are taking on the majority of childcare. If self-employed, arrange a personal pension arrangement and contribute regularly, as you will still benefit from tax relief.
If you have a child under age 12 and are not working, or don’t earn enough, make sure you claim child benefit, even if you are not entitled to all of it. Claiming child benefit means you will get national insurance credit, which then counts towards your state pension. You only get a full state pension if you have 35 years’ national insurance contributions.
Take out life insurance
The average stay-at-home mum works an average of 94 hours a week and on that basis would earn £86,310 a year, according to US research based on salary information.
So how would a young family cope if a stay-at-home parent – still most likely to be the mum – suddenly died. Dying unexpectedly is not something we like to think about, but the nature of life means it’s something we’re all vulnerable to. If it happens, life insurance can give you peace of mind that your family will be protected financially. Life cover costs as little as £5 a month and you can also add critical illness cover to your policy to further strengthen your family’s financial safety net.
Make a will
This is essential if you have children, especially if you want to have a say in who will look after the children and take care of your possessions and property (known as your ‘estate’.) Without one, your family could face a financial nightmare. For example, if you are not married, then your partner may not get anything from the estate and possessions may not be distributed in the way you wish.
Writing a will can also reduce inheritance tax that might be payable. Currently, anything valued above £325,000 is subject to 40% inheritance tax, but this can be reduced with careful planning, making use of trusts and using gifting allowances.
Top up your ISA
Currently, you can save £20,000 a year into a tax-free ISA, so make the most of this allowance. You can start saving into an ISA from as little as £1 – either into a cash ISA, which pays a set interest rate, or an investment one. Try to save a regular amount each month or pay in a lump sum whenever you can.
If you don’t think you will need access to the savings for at least 10 years, then consider an investment ISA, where the return potential is higher. But remember, investments are not risk-free and you may get less than you put in, which is why it is important to invest for 10 years or more. There are plenty of investment guides elsewhere on this site.
Switch service providers
Switching service providers such as broadband, phone, gas, electricity and insurances could save you hundreds of pounds a year. If you haven’t switched services for a while, then it’s time to review them to get onto a better deal. Many companies will offer new customers significant discounts, but these usually only last for a year, so when the deal expires, you should ditch and switch. This is particularly true of broadband, TV and phone packages.
It’s also important to shop around, for example, if the car insurance is up for renewal; don’t just accept the renewal quote – find a better deal and ask the current provider to match it or move. Make sure you cancel any auto renewals to avoid paying twice.
Last but not least, if you look after your own savings & investments, make sure you’re getting the best deal on your platform. To find out more use our comparison tools.
