How to... avoid building up debt when you have a baby

HAVING a new baby is a joyful time – but it can also put a significant strain on your finances. A third (34%) of new parents feel unprepared for the costs of parenthood, according to a survey by credit report provider Noddle.

A quarter (25%) rely on credit during maternity or paternity leave, racking up debts of more than £2,700, the poll of more than 1,000 people found – despite making efforts to prepare financially in advance, including putting aside savings and reducing existing debts.

More than half (53%) of new parents admit they were anxious about money during their leave, with 35% returning to work earlier than planned in an effort to improve their finances.

Here are Noddle’s tips for prospective parents:

■ Agree with your partner how much you’ll aim to save each month in the lead up to the birth.

■ As well as the costs of a new baby, bear in mind you may also need to adjust for changes to your income – so research what statutory leave and pay you will be entitled to.

■ Make a shopping list – then speak to other people who have children to find out what items you really need to buy and which items are completely useless.

■ Claim what you’re entitled to. As well as statutory maternity pay or allowances, you could be entitled to certain benefits.

■ Checking your credit score will give you a snapshot of all your outstanding credit. You can use this to work out where you might be able to cut back and where any problems might arise if you need to borrow more when your baby arrives.