Spain debt

Women must go into debt of £2,800 to cover maternity leave

It takes more than two years for women to bounce back financially after having a baby, leaving many worried about their own financial security and almost a quarter (23%) are confident they will never get back to financial status. where they were before giving birth. A study on new parents and future parents by the smart money platform, credit karmafound that one in four women (26%) are going into debt to cover maternity leave – an average loan of £2,800 – an increase of £560 from 2018.

Nearly a quarter (23%) of women no longer have any savings when they go on maternity leave, but the rise in borrowing has been accelerated by the rising cost of living. Parents who borrow use the money to cover basic expenses like groceries (42%), bills (32%), and baby clothes and supplies (26%), according to the study.

In addition, female student loan holders face heavy interest charges on their loans when they are on leave and unable to work, which already has a significant financial impact. A new mother racks up an average of £1,770 in interest on her loan in just six months off.

Women often see childbirth impact their credit score, which can see them lose nearly £17,000 more than men over their lifetime. Indeed, many (17%) rely on their (usually male) partner’s income to seek any necessary loans during maternity leave, giving her a chance to boost her score as the owner of multiple credit agreements. . This is a debt owed by both partners, however, in this scenario, the mothers are not recognized for demonstrating positive borrowing behaviors.

Akansha Nath, Head of Partnerships at Credit Karma UK, said: “Women are often financially disadvantaged throughout their lives, and the responsibility of giving birth plays a huge part in this gender disparity. At a time when the cost of living affects most people and every penny counts, it is more important than ever that women take advantage of any support available to them.

Akansha’s top tips for managing money and motherhood:

1. Move your money: If you managed to put some money aside before giving birth, make sure it’s working hard for you. Shop around for bank accounts with the best interest rates. Some banks even encourage you to transfer your account to them

2. Use your networks: Talk to other people who have kids to find out which items you really need to buy and which (often expensive) items aren’t worth spending. They might even have freebies for you, like prams or high chairs, which can end up being very expensive.

3. Check your credit: If you think you need to borrow money to cover parental leave, take stock of your finances by checking your credit score. You get an overview of all your outstanding credit, including overdrafts, credit card balances and mobile phone bills, so you can see how much you owe. Then you can search for the best deals available on things like credit cards and personal loans to help you pass your time away from work.

4. Consolidate your debts: You can use the information in your credit report to determine where problems might arise if you need to borrow more money from your existing lenders. You might want to research shifting credit card companies to get a better interest rate, whether it’s for future purchases or a balance transfer to pay off debt.

5. Claim what you are entitled to: in addition to statutory maternity pay or allowance, you may be entitled to other benefits such as tax credits or the Maternity Exemption Certificate from the NHS for free prescriptions and dental care. To keep your bills in check, take advantage of any government assistance available, or if you’re worried about dealing with rising household costs like energy bills, talk to your supplier to see if there’s flexibility. or options to stagger your payments while things are tight