Archive for November, 2012

The price of a child

Posted: November 15, 2012 in Uncategorized

Financial planning has shot up the agenda for me having recently become a father.

Suddenly the price of nappies, baby formula and cotton wool are hitting my bank account and I worry about how far the amount my wife and I have saved will stretch so that our daughter can have a decent upbringing and future.

On leaving the hospital with a crying baby in tow, we were handed a parenting pack full of booklets on parenting tips, discounts for nappies and hidden at the back, forms for Junior Isas and child benefit.

The Junior Isa form was marketing material from a particular provider so I discarded that, opting instead for my financial adviser to guide me, but it is the child benefit issue that has got me and most of the nation thinking.

From next year, the government has decided that high earners will be taxed on their child benefit. It is often hard to relate to government announcements that target the so-called wealthy, but the child benefit rules will hit my household.

This puts my family at the centre of the debate about whether this benefit should be for poorer families or for everyone. Some may say higher earners do not need this money and are not necessarily using it for their child.

The assumption seems to be that once you earn above a certain amount, you are either a tax avoider or suddenly responsible for everyone else who does not earn as much.

How can the government balance restricting this benefit away with efforts to promote a savings culture. Parents have already seen the benefits of the child trust fund curbed and replaced with a Junior Isa regime that is plagued by poor fund choice and no incentives.

Becoming a parent is a privilege that many struggle to achieve. But it is also expensive and all those lucky enough should be entitled to support without being stigmatised for earning more than £50,000.

The new child benefit rules tax hard work, dis-incentivise saving and ignore the potential future contribution a child may make in an already ageing society.