According to credit report provider, Noddle, over half of parents are anxious about money during their parental leave and despite saving an average of £3,000 many under-budget for the monthly costs.
In the end, as many as one in four new parents are forced to rely on credit during their maternity or paternity leave, the study discovered.
Now Noddle is urging people due to take time off work to care for their newborn to consider financial planning as part of their preparations.
Jacqueline Dewey, managing director at Noddle.co.uk, said having a child can be tough on the finances as parents have to factor in new costs such as nappies, clothes, toys and equipment whilst also on a reduced income.
She added: “It’s important to do as much budgeting as possible before the baby is born to help reduce financial anxiety.
“You may choose credit as part of your planning, and this can be a good short-term solution. But it should be managed correctly, because otherwise it can affect your credit score and potentially your ability to get credit for larger items as your family grows, such as a new home or bigger car.”
Dewey has offered some tips for prospective parents to help them be more financially stable when their baby arrives
- Agree with your partner how much you will aim to save each month and stick to it. The Money Advice Service’s online budget planner can help.
- Make sure you adjust for changes to your income. Check out the gov.uk guide to help you calculate the statutory pay and leave to which you will be entitled.
- Make a shopping list and speak to other people with children to find out what items you need and which ones are useless.
- Claim all the benefits you are entitled to. As well as statutory maternity pay or maternity allowance you may also be allowed to claim tax credits and child benefit. Register for the NHS Maternity Exemption Certificate for free prescriptions and dental care.
- You can take stock of your finances by getting a copy of your credit score. It will provide a snapshot of any outstanding credit you owe and may help you find areas in which you can cut back.