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Coping with debt when you’re planning to start a family

Posted 11 October 2018

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Are you wondering whether it’s financially feasible to start a family while you still have debts? Read our tips on getting your pre-baby finances in order.

Becoming a parent is an exciting time. However, it’s totally normal to feel a little trepidation as well. You may be concerned about your finances, especially if you’re already struggling to meet all your monthly outgoings and pay off your debts.

Are you wondering whether it’s financially feasible to start a family right now? Or already expecting a baby and wondering how you’re going to manage? Don’t panic! We’re here to help. Read on for our tips on getting your pre-baby finances in order.

Make a budget

Start by looking at your current income and expenditure. It can be difficult to get a realistic picture of your day-to-day spending if you don’t normally record it in detail. Try keeping a spending diary for a fortnight, then using an online budget tool. You may be able to identify areas where you can cut back (see ‘Start saving’, below).

Next, add in the extra baby-related expenses you’ll have. These include one-off ‘start-up costs’, like maternity and baby clothes, and equipment like cots and car-seats. Then there are the ongoing costs of an extra mouth to feed.

Factor in the loss in income you and/or your partner are likely to experience if you take parental leave. You’ll need to check your employer’s policies on parental pay and leave. When it comes to maternity leave, for example, some employers will keep you on full pay for a while, then drop you down to Statutory Maternity Pay (SMP). Others will pay SMP from the start in which case you’ll get 90% of your average weekly earnings (before tax) for the first 6 weeks, then £145.18 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks. Some employers offer contractual maternity pay in addition to your statutory entitlement.

You may also be entitled to some benefits to help offset your drop in income. We have an online benefits calculator you can use.

To get a realistic idea of what you’ll need and how much it will cost, ask other families which ‘new baby’ items they bought but never used. There’s always something! Friends, relatives or contributors to online message boards are all great sources of advice. They may also be good sources of second-hand goods, which parents are often eager to sell or even give away. Check the retail price of new items before you buy them second-hand, to be sure of getting a good deal.

Start saving

Budgeting should have helped you identify non-essential outgoings. Cutting back on some of these areas now will help you adjust to your tighter post-baby budget. The money you save will help you pay those one-off expenses and get through a temporary period of lower income. Online parenting communities are full of saving tips.

Put your savings somewhere you can get to them when you spot a baby bargain, but where you won’t be tempted to dip into them for those non-essentials. For example, get a high-street savings account without an ATM card, so you’ll need to transfer the funds over before you spend them.

If you need help

If you think you’re going to struggle with the costs of being a parent until you’ve dealt with your debts, it might be time to look into a debt solution. You can see what other options may be suitable for you here. Alternatively, the Money Advice Service also has information on the debt solutions open to you.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.