Working and spending time with baby
Babies can come at the most surprising moments in life. And for many people, they arrive at a point where your personal finances aren’t at their strongest.
In fact, some women entering maternity leave are doing so without any savings at all.
Reduced pay during this time coupled with the costs of a newborn means many mums have to borrow money to get by. And some are being left in debt.
A study of parents by finance company Credit Karma found that a quarter of parents get into maternity leave without any money saved, while 26% of women get into debt while on their maternity leave.
The amount in borrowing has increased by £560 since 2018, the company says, taking the average borrowed per parent up to £2,800.
Those with student loans face the harshest outcomes as the interest rate on those loans remains seriously high while they are on leave and unable to pay it off.
Credit Karma said women with interest loans accrue an average of £1,770 loan interest in just six months of leave.
Given the cost of living crisis, which is seeing bills go up as never before, this paints a dire picture for new parents.
Akansha Nath, head of partnerships at Credit Karma UK said: “Women are often disadvantaged financially throughout their life, and the responsibility to give birth plays a huge role in this gender disparity.
“At a time when the cost of living is affecting most people, and every penny counts, it’s more important than ever that women take advantage of any support available to them.”
These debts, even if eventually paid off, can then follow women into life, affecting their credit score and therefore their ability to buy homes and other goods.
Credit Karma said maternity-affected credit scores can set women back an average £17,000 in interest over the course of their lifetimes.
If you are struggling with maternity debt, there are resources that can help.
Step Change has a benefit checker, as well as list of grants available to expectant parents. The website also offers free money management tools designed to help people with their finances, without judgement.
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Source:: The Huffington Post – UK Tec