Bringing up children is pushing parents into the red, according to research from MoneyExpert.com which reveals that, on average, parents rack up £1,140 in the first year after having a child.
Chief executive, Sean Gardner, said: “For most of us worries about money go out of the window with the joy of having a baby. It’s hard enough coping with the sleepless nights and new responsibilities without thinking about budgets.”
“But financially a new baby can cause havoc because of the combined burden of extra costs and reduced income,” he said.
More than 40 per cent of parents end up in debt as a result of higher expenses and lost earnings. Around seven per cent found themselves with debt of £2,500 in the first year, and two per cent were £7,000 in the red after 12 months.
The survey showed that 39 per cent of couples lose out on earnings after a child is born and are forced to look elsewhere for additional income. And, although 28 per cent received financial assistance from family members, 22 per cent used credit cards and 10 per cent relied on a loan to make up the loss.
Mr Gardner said: “If money is already tight, it’s no wonder that so many families have had to turn to borrowing to make ends meet. There are obviously increased costs so debt is often a sensible way to tide you over.”
“However the most important thing under those circumstances is that you choose the most appropriate form of borrowing for you,” he added.
Moreover, the expense does not stop when children grow up. Education costs can also force parents into the red, according to The Children’s Mutual. Chief executive, David White, said parents often have “to choose between their own financial security and bailing their children out”.
The company found that 31 per cent of parents would use retirement savings to support children through university and, according to Mr White, this “could be misguided and lead to serious problems for families in years to come”.
He advises parents to start saving early and regularly, using Child Trust Funds. “If families were to save £100 a month into a Child Trust Fund account over the next 18 years, their children could graduate into adulthood with more than £37,000,” he said.
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and Child Trust Funds