Expectant Parents Argue Over Money Concerns
· New report reveals stressed parents-to-be admit to rowing over money concerns.
· 45 per cent of working mums set to cut short maternity leave and return to work early because of their finances.
· Expectant parents spend £140 million getting ready for the new arrival.
The UK is experiencing its biggest baby boom in 40 years, with nearly 750,000 babies born in 2011 alone and the birth rate expected to peak at 845,000 in 2013.
Whilst parents-to-be across the country are excitedly planning for the new additions to the family, a new report by MoneySupermarket has revealed that more than a third of expectant parents are worried about how they will afford the cost of having a baby.
The report by the comparison website analysed the concerns of the next wave of baby boomers. It revealed that for nearly half of expectant parents finances were not a key consideration when trying for a baby.
For those who are struggling to finance the cost of a baby, don’t fall for all the marketing hype surrounding what’s essential for the arrival of a child... you’ll probably find you need a lot less...
However, of those parents who admit they are worried how they will manage financially when their family expands, 44 per cent say the stress has caused them to row with their partner.
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.
“Having to adjust your lifestyle to cope with the new arrival is hard enough, but with many couples seeing a fall in income due to one of them giving up work or taking maternity leave can heap further pressure on families when they least need it.
“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.”
£140 million baby boom
Expectant parents have splashed out an average £166 each so far in getting everything ready for their new arrival, totaling more than £140 million across the UK. Breaking the mould, 16 per cent admit to spending more than £500, buying essentials ahead of the birth.
Clare added: “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.”
Agreeing with Clare, Justine Roberts, Mumsnet CEO and Co-Founder, said: "For first time parents, it's almost impossible to predict which baby products will turn out to be essentials and which will gather dust in the cupboard.
“One family will find that a multi-purpose travel system fits in perfectly with their needs; another may realise that all they need for transport is a sling.
“There's a mind-boggling array of infant devices on the market, but just because something exists doesn't mean that anyone actually needs it.”
The report further reveals that whilst parents have been splashing the cash getting everything ready, many working mums are not planning to take their full maternity leave as they don’t think they can afford to do so.
Nearly half of working mums will cut short their maternity leave. A third are planning to take 6 – 8 months off after the birth, whilst 10 per cent say they will take just 3 – 6 months, all because of their financial situation.
With the majority of working mums receiving only the statutory maternity pay of six weeks at 90 per cent 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.
Benefit cuts and nursery costs
The UK’s next wave of baby boomers will also be the first to be born after the recent Child Benefit cuts came into effect. More than a million parents have faced a reduction in income after those who earn more than £50,000 a year had their benefits cut in January this year.
With first time parents receiving £20.30 per week for their first child, this equates to more than £1,000 a year in income they will no longer receive.
The report revealed 11 per cent of expectant parents who will no longer receive Child Benefit were budgeting ahead of the birth with this in mind, are concerned as to how they will cope. An additional 11 per cent of parents also worry how they will manage financially without the benefits.
Clare advised that these shortcomings can be worked around and expectant parents shouldn’t give into the “marketing hype” around baby products.
She said: “For those who are struggling to finance the cost of a baby, don’t fall for all the marketing hype surrounding what’s ‘essential’ for the arrival of a child.
“It’s easy to believe that you need all of the latest paraphernalia and gadgets money can buy. But in reality, you’ll probably find you need a lot less than you might think.
“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,” Clare explains.
The report by MoneySupermarket also revealed that 65 per cent of working parents say they will have to pay for childcare whilst they are at work.
Additional research has highlighted that the national average cost of childcare per year is £4,993 for 25 hours, which equates to 19 per cent of a working parent’s annual take home.
However, with 23 per cent of parents expecting to pay for full time nursery care (26 – 50 hours) they could face much higher childcare costs.
Borrowing money and rising costs
While half of expectant parents say they have enough money saved up should any unexpected costs arise when the baby is born, a quarter will rely on credit cards and 17 per cent on overdrafts to deal with any emergencies.
One in five also say they would borrow from family and friends to get by. Having a new addition to the family will obviously also mean rising costs for every day bills such as utilities, grocery shopping and other household essentials.
However, most expectant parents admit they haven’t worked out how much costs will rise by. Two thirds have said they haven’t worked out the rising costs in detail and 14 per cent have said they haven’t thought about it at all.
Clare advised: “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.
“If you have outstanding debts, such as credit card debt or other loans, the best thing to do is to try and switch the debt so you’re paying the lowest interest possible. For instance, you might 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.”
For more information and advice go to Financial Tips and Advice for When You Plan to Have a Baby.