When you have children, you get lots of advice and tips from everyone but one area that tends to be overlooked is the financial aspect.

In the excitement of impending parenthood, or the crazy first few months – and years – you may never get around to taking some important financial steps. It’s too easy to forget this essential topic so this article is designed to be a useful guide to some of the issues you need to consider.

Multiple surveys have put the cost of raising a child at eye-watering levels over their first 18 years and expats working in the UAE have the added cost of education and medical bills to contend with.

Factor in university or college costs and the fact that many young adults may not be fully financially independent until closer to age 25, and you can see just how important it is to plan sensibly.

Let’s look at some of the financial steps you need to consider.

1. Put together a budget

Surveys in the UK have found that the average cost of a baby in their first year is now around £11,500.

At time of writing that is equivalent to AED 54,000 but it is very easy to exceed that figure, especially in the UAE.

Decorating a nursery, buying clothes, cots, pushchairs/strollers, toys, plus nappies and all the extras really add up.

You may need to employ a nanny or pay nursery fees.

It doesn’t really get any cheaper as they get older as school fees are expensive, as are uniforms, extra-curricular activies and more.

Over 18 years, estimates of total cost vary, starting from £165,000 (AED 775,400) but far more in many cases.

By planning ahead and setting a monthly budget, you can avoid over-spending.

2. An emergency fund

This is my number one priority for personal financial planning but it becomes even more important when you have a child depending on you. Life is different with children as you have far more responsibilities so this matters, especially when in the UAE without a safety net.

I suggest that you build up an accessible fund equivalent to six months’ outgoings. Even if this takes a while to do, start it now, and ideally keep the cash offshore where it cannot be frozen for multiple reasons. You never know what is aroud the corner.

3. Insurance

A heading that covers a few types of policies, all of which do different things.

Life insurance: To put it bluntly, life polices pay out a lump sum if you die. Not a happy thought but the kind thing is to ensure that your family can manage financially if you are no longer around. Their financial security is paramount and life cover doesn’t cost as much as you might think.

Life insurance can never replace a parent or a partner but it can make life a lot less stressful if left alone.

Having a sum of money allows someone to take a long break from work, to reorganise their life, to provide an income, to have the means to pay into a pension, to support family.

Life cover is not just about the money itself but is about financial freedom and the removal of monetary concerns, one of life’s biggest causes of stress. You take out life cover for your partner, to make their life easier.

This short video demonstrates the importance of protection plans.

At the very least, you should have life insurance in place to cover debts and the likely cost of raising your children until they are financially independent.

Critical illness cover:  This can be a stand-alone plan, or more often is added to life policies. Critical illness cover pays out a lump sum if you are diagnosed with a serious illness, with the majority of claims being for heart disease, stroke or cancer, or if you are permanently disabled. This is useful as you are more than four times as likely to be seriously ill than to die before age 65 years.

Avoid plans that claim to combine life assurance and savings as they rarely do both jobs well and you will give yourself far more flexibility by keeping these two very different needs separate.

The point of quality life and critical illness cover is not only to repay debts and replace income, but also to give you choices and flexibility should one of you die.

Medical insurance: If you are on a Dubai or Abu Dhabi visa your employer must provide medical insurance for you and many will extend this to dependents. If self-employed you need to arrange your own and also for any dependents and children. Treatment for anything serious is very expensive and good cover is essential.

Update. Starting from 2025, employer-provided health insurance coverage will be mandatory for all private-sector and domestic workers across the UAE.

4. Wills

No one likes to think about mortality but it is a fact of life and having a new baby is a time when people start thinking about steps they need to take to really look after their family. If you didn’t do this then, do it now.

A suitable Will is essential when you have a child, more so than when you have property or other assets

It really doesn’t have to be painful, or even expensive, but the right Will means that you get to say who receives your assets in the event of death rather than it being left to the law of the land. You also get to specify who would bring up your children should you both die.

When you are an expat in the UAE, you have to consider the inheritance laws of more than one country and it is so important to get this right and to protect your family, and assets properly.

See links at end of article for more information and get in touch

5. Start saving

In an ideal world, you start saving when the child is no more than a twinkle in the father’s eye in order to offset expenses but you should also save for your child’s future. School fees are expensive and even you if have an employer that covers that cost up to age 18, you should think about further ahead such as university.

As a parent of young children, you probably don’t want to think about how fast your child growing up but if you save from their early years, it will be so much easier on your pocket in the long run.

University costs will only increase and it would be great for them to start their adult life without debts or student loans to repay.

And if they don’t go to university, you can pay off your mortgage or treat yourself!

Summary

As a single person, or a couple, you can usually manage financially when life gets difficult but this all changes when you have children. Your children depend on you so it is very important to plan ahead so that if life takes a bad turn, they will be okay.

There is an order of property when it comes to financial planning and when you have a child, the first steps are to arrange suitable life insurance and wills.

This does not have to be a stressful or complicated process and there are a number of steps that all parents should take, especially while living in the UAE.

One of the most important things I do is ensure that families are properly protected and that starts with sensible and factual advice.

 

I work with you to set up the plans that you need, in the right way, and once these are in place you can relax in the knowledge that you have done the right things for your family.

This is proper financial advice with the emphasis very much on the information that you need in your personal situation, not the generic selling of products. This is experienced, qualified, ethical and professional advice. The topics are serious but our conversations are always relaxed and friendly.

Nothing is more important than your family and we can ensure that they will be financially secure no matter what happens in life. Contact me for a chat to see what steps you need to take.

Links to useful articles with more information:

Where there’s a will, there’s a way to protect your family

How to plan for the worst when living in the UAE

Offshore bank accounts. The benefits for expats

Is your family financially protected if you die? Six common errors.

Higher education costs. The facts & how you can plan

Cost effective & secure currency transfers

Areas of advice. How can I assist?

To arrange a discussion on any aspect of your personal financial planning, please email me at keren@holbornassets.com

Most meetings take place over Zoom which is great for everyone’s time management and sheer convenience.

 

I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats in the GCC, and the general consumer, financial and legal information that I provide in The National newspaper, on radio, and on the Facebook group British Expats Dubai.

Please take a look at the other useful articles on this website.