Having a baby can be a steep learning curve for new parents, as they learn to manage finances as well as looking after a baby. The Financial Services Compensation Scheme (FSCS), which protects your savings up to £85,000, has been surveying parents and parents-to-be in new research to find out they fund or plan to fund their baby bill.
Eight in ten parents-to-be expect to do a lot of saving for baby, and are planning to put aside an average £234 per month a couple. However, this is £100 more a month than parents who have already got children did before their first baby was born. And it’s three times as much as the Child Poverty Action Group say is necessary (£70 per month for a couple and £82 for a lone parent).
That monthly saving is coming mostly from salaries, with nearly six in ten planning to cover baby costs from their current account and three in ten from their savings. Very few are planning to fund baby bills via credit cards, loans or payday lenders.
When FSCS asked parents with children about their pre-baby savings, nearly four in ten (37%) wish they had saved more for baby bills. Yet our research suggests they save too much?
Sarah Pennells, money expert and editor of www.savvywoman.co.uk commented: “No matter the income level, parents-tobe should put away as much as they can in savings before the baby comes, and become a friend of the second-hand marketplace once they start buying those big ticket items for baby. Most parents experience another shock when they plan childcare to return to work – so those savings will never be wasted.”
What is FSCS?
FSCS was set up by government to protect your savings in UK banks, building societies and credit unions. If your financial firm were to go bust, FSCS will automatically refund your savings (up to £85,000 per person) within seven days and it’s completely free of charge. So whether you’re saving for your first family holiday, a new buggy or your child’s education, you can feel rest assured your savings are safe.
You can check that your savings are safe at www.fscs.org.uk/protected