So all of a sudden you’ve got to pay for another person – a small person, but a person nevertheless – and if one of you is giving up work, you’ll have less money coming in. Even if you’re both still working, you may be shelling out for childcare, eating further into your finances. Yet with your new responsibilities, it can be wise to have some cash saved up – especially if you plan on sending your children to university.
Spending has a habit of expanding to swallow up whatever spare money you have: a recent study of high earners revealed one who couldn’t imagine squeaking by on a mere £100,000 per year. Up to a point, such things are relative and if you’re strict about regularly hiving off some of your money into a savings account before you start spending each month, you may be surprised how far it stretches. You don’t need to be stingy, just think about each purchase and whether it’s totally necessary. Sometimes you may answer ‘no’ and buy it anyway, which is fine as long as you don’t do it too often. The key is to not spend money without thinking.
If you need a savings account, an ISA is ideal for most ordinary working people – you can get very good interest and it’s not taxed.