Nearly half of new mothers forced back to work early
According to a new report, the UK is experiencing its biggest baby boom in 40 years with nearly 750,000 babies born in the 2011 alone, and the birth rate is expected to peak at 845,000 this year.
However, despite the excitement of a new arrival, 37% of parents-to-be are worried about how they will afford the cost of having a baby, with many couples rowing over finances due to the stress.
A third of new mums-to-be are planning to take 6 – 8 months off after the birth, whilst 10% say they will take just 3 – 6 months due to their financial situation.
With the majority of working mums receiving only the statutory maternity pay of six weeks at 90% of salary, it seems many don’t feel they can take off the full year they would be entitled to due to a reduced income.
Clare Francis, personal finance expert at MoneySupermarket.com, said: “As exciting as planning for a baby is, it can also be a daunting and stressful time.
“However, money worries needn’t get in the way of what should be a magical time. Planning ahead and understanding your finances ahead of adding to your family is vitally important, and will save you many sleepless nights – at least until the baby arrives!”
“A fall in income can be offset by putting some money aside in savings, which you can then dip into when required.
“Although the added expenditure of planning for a little one can quickly eat up disposable income, reviewing your household outgoings and reducing your everyday spending can go a long way to freeing up cash.
“Knowing the true shape of your finances can help you take control and see where you can cut back and make a few simple switches on household bills that could save you more than £1,000 a year.”
Parents-to-be are being advised to not fall for the hype surrounding many ‘essential’ baby items.
Moneysupermarket.com says that it’s easy to believe that you need all the gadgets and the latest paraphernalia before the arrival of your child, but parents often find that they need far less than they originally thought.
Francis added: “Talk to other parents who will be able to give you the benefit of their experiences, and if you are lucky, you may find friends who are willing to give, or lend baby equipment and clothing which saves splashing out on unnecessary items.”
“It is a good idea to have an emergency savings pot if you’re planning a family. If you’re lucky enough to already have money put aside, make sure you make the most of it by using an ISA to protect your savings from the taxman in the first instance, and for any extra savings you have, make sure you’re not letting your money languish in a low-interest account.
“While interest rates aren’t as high as they’ve been in the past, moving your money to a more competitive account is a smart move.”
Couples with outstanding debt are also being advised to switch cards in order to ensure they are paying the lowest interest possible.
For example, you may be able to move an existing credit card balance to a 0% balance transfer card, which will save you the cost of interest each month.
As long as you have a repayment plan in place which will ensure you pay off the balance within the promotional period, this can be a good way to pay down your credit card debt.
If this is not an option for you, the most important thing is to try and pay down your most expensive debt first – this will save you money in the long term.