Financial planning
Financial planning

Foster carers provide loving, caring, and stable environments to children with a variety of needs. Sometimes, foster carers leave full-time stable careers to answer their calling, which can put financial strain on their accounts. This is why foster carers need to spend time on financial planning. Continue reading to find out more.


A budget is an essential tool that helps to track incoming and outgoing payments and keep you spending within your means. Creating a budget can be difficult, but it’s well worth spending time on because it will help to reduce debt, save money, reach financial goals, and avoid financial stress.

The first step to creating a budget is totalling your income, which will include a fostering allowance and any other monetary supplements. Once you have a good idea of your available funds each month, it’s time to total your outgoings and subtract them, which will leave you with spare cash to save, spend, or invest.

Financial Goals

A budget will keep your spending on track, but financial goals will motivate you to stick to your plans. Common goals for foster carers include saving for retirement, putting money away for a house deposit, or building an emergency fund. Whether your goals are short, medium, or long-term, they need to be specific, measurable, achievable, relevant, and time-bound (SMART).


With a clear goal in mind and spending under control, you can turn your attention to investing, which will grow your assets over time. When you invest, you buy various assets including stocks, bonds, and real estate and profit on market appreciation.

Investing is a fantastic way to save for retirement, grow wealth, or reach any of your financial goals. However, you must keep in mind that investing can be risky, so you have to be willing to lose every penny you invest.

Tax Relief

As a foster carer, you’re entitled to several tax breaks and deductions, which reduce your tax liability and help to save money. Here are some of the tax reliefs available:

  • Foster care allowances are exempt from income tax – up to £18,140 at the time of writing, plus a tax relief of up to £450 for each week a child is in their care.
  • Costs for mileage can be claimed for travel relating to fostering duties.
  • Additional relief may be claimed for educational supplies, school holidays, clothing, and food for foster children.

Retirement Planning

Foster carers are entitled to National Insurance (NI) credits, which make up part of the basic and additional state pension. This can be claimed for every week you are registered as a foster carer, but it only needs to be applied for once a year via the CF411A form.

Alongside this payment towards your state pension, we recommend you start saving and making stable investments to strengthen your pension pot. For example, there are many tax-advantaged accounts including the self-invested personal pension (SIPP).

Foster carers take up an important role that benefits thousands of children, but to provide the best level of care, foster carers must master the art of financial planning.

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