Becoming a parent can be overwhelming – regardless of how well you’ve planned for it. In all the excitement, parents’ long term goals may get overlooked.
As an employer, you play a crucial role to support parents to balance work and family life. This starts from before a new baby, right through to university and beyond.
But at the start of the parenting journey, giving employees better insights into how a career break – be it for parenthood, or adoption – can affect their finances will help strengthen the bonds between them and you.
Here are four reasons it’s so important to make sure those planning parental leave have someone to talk to about money.
Help employees navigate complexity
Navigating pensions, mortgages, childcare vouchers, new costs and changing income around parental leave can be overwhelming.
With coaches and advisers, employees have a judgement-free, safe space to ask questions they might not feel comfortable raising elsewhere. In fact, our coaches are often the first ones to hear from an employee that there’s a baby on the way, or being planned for! These conversations are a powerful tool for employees to air their concerns about parenthood and how it might affect their lives, careers and money later in life.
Taking a 360 degree view of parents’ finances means coaches or advisers are able to discuss any money concerns and navigate ‘silly’ questions. Such as, whether you should keep paying into your pension, whether you should consider a mortgage holiday for part of your parental leave, or weighing up whether to apply for child benefit payments (which can be a particularly complex calculation based on balancing salary, state contributions, and overpayments).
Enhance your diversity, equality and inclusion agenda
When it comes to having children, gender bias often rears its head. The burden of parental leave and taking time off work for childcare generally falls to women and this can result in lost earnings and career progression opportunities.
Money coach Ed Fraser says, “When it comes to pensions, women in particular can short-change themselves when it comes to their future State Pensions by not applying for Child Benefit as they think if one of the partners is earning over £50k they are not eligible. But this isn’t the case. Currently you can only claim three months’ back credit, but the good news is the government is changing this, so watch this space.”
Having both parents in the room for financial planning conversations will make sure expectations are set jointly on managing the costs of having children. Building a financial plan as a couple can help stop unconscious bias within a relationship.
This holds true for any couples with children, or who are about to become parents. Ensuring the burden of responsibility falls equally between both parties helps everyone feel more confident and knowledgeable about money matters.
Help employees keep their long-term financial health in sight
It’s an incredibly exciting time for anyone to become a parent, but the focus tends to be on the immediate needs first. So chances are your employees will be thinking more about adjusting their short-term spending than their long-term financial health.
Future parents will also need to ensure they have sufficient life insurance and sickness cover in place. As well as thinking about whether they need to top up any company benefits privately. It’s also a great time to make sure wills are written, and pension beneficiary nomination forms that are up to date.
No one likes to think about the death of a loved one or a long-term illness, but preparation is the best way to minimise difficult administrative tasks in the future – and ensure a new child’s future is more secure.
Motivate and retain your top talent after parental leave!
Of course, having a baby is not the end of the story for the employee or the employer. Most parents will plan to return to work – although their requirements and timescales may be unclear. They’ll also probably want to create different and more flexible working patterns on their return.
Giving employees the tools to model different scenarios for parental leave, and the impact on their finances is a powerful decision-making tool. This transparent view also makes conversations with their employer about returning to work easier to plan for – minimising stress at a time when they might already be feeling nervous about their work-life balance.
Money Coach Ed adds, “Being able to talk someone through this paperwork and highlight the areas to be aware of makes life easier for new parents, which reduces some of the mental load they are already carrying as parenthood arrives and their children grow.”
Employers who are willing to discuss and allow for more flexible policies can increase the attachment their top talent have to the company when they do return to work, further rewarding the investments you’ve already made in them.