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Although “debtors’ prisons” are now very much a thing of the past, debt can still be a nasty trap for the unwary and those who are already in a difficult financial place are, of course, likely to be the most vulnerable.  As any parent will know, children are expensive and the younger they are, the more expensive they are, which is why it can be only too easy for young families to fall into the debt trap and potentially end up bankrupt.  With that in mind, here are some points for parents (and parents-to-be) to consider.

Children need less “stuff” than advertisers would like you to believe

At the end of the day, a child’s needs are actually much the same as an adult’s namely food, clothes and shelter, if you’re going to stretch it a bit, add in some transport, some way to communicate with their friends and some form of entertainment.  That really is it, but advertisers of all sorts will try to do their level best to convince parents that children would need, or at least benefit, from a whole lot more.

This is probably most obvious with first-time parents to be, who, understandably, are likely to want to “get everything ready” before their newborn arrives, but clever advertising can have an impact on parents of older children too, especially the parents of image-conscious teenagers.  The older children get, the more capable they are of understanding finance, so make a point of setting their expectations about what you can do for them and what you expect them to do for themselves.

Child-care can work out very expensive

Children may need less “stuff” than you think but they may need more child-care, especially if you plan to return to work.  Even if you don’t, there is usually a limit to what you can get done when children are around, particularly when they’re young.  There may also be a limit to the free child-care you can get from family and friends.  For example, grandparents may still have to work themselves, at least to some extent and as they age, they may be less capable of managing children.  Another possibility is that work considerations may force you to move further away from family and friends, meaning that you need to make alternative arrangements for child-care.

With this in mind, you may wish to be very careful about saving for your child through a Junior ISA.  Although these benefit from tax breaks, the money you put into these accounts is effectively frozen until the child’s 18th birthday (upon which they get full control of it, which potentially raises another set of issues).  Saving through alternative means gives you the option to withdraw money if you need it (and potentially put it back later).

You may also want to be very careful about buying anything non-essential until you have managed to build up a decent emergency fund/cash cushion or, if you do, to try to do it in the most affordable way possible, such as to take your holidays in the UK rather than going abroad and to buy pre-owned as much as possible.

Benefits may be of some help

Some benefits are given through employment and some through the government and the rules around both can and do change, but if money is tight then it is always worth seeing if you could be eligible for any help.  Even if it isn’t, it can still be worth looking at the potential for benefits as financial aid in the present could help you to avoid tight times in the future.  For example, some benefits may provide National Insurance credits, which may increase your chances of being entitled to other benefits in future, in particular, a state pension.

This Christmas don’t put yourself and your finances in long-term jeopardy for the sake of marketing pressure. Your children need you mentally whole and healthy more than anything else.

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