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Lack Of Planning 'Could Cause Financial Difficulties For Families'

Sep 5, 2007
hose Britons who are planning to start a family, or already have children, need to budget their finances as otherwise they risk developing debt problems, it has been suggested.

According to James Falla, managing director of Thomas Charles, many households find themselves in financial difficulties in the aftermath of having a baby due to a lack of monetary planning. As a result, he suggested that as soon as couples become aware that one of them may be off work for a certain period of time, they should put some cash away to help supplement their finances for while they are not at their job. Mr Falla claimed that as the majority of consumers are insufficiently financially prepared they often turn to forms of borrowing such as secured loans and overdrafts as a way of supplementing their spending.

He said: "If you have no idea of the money coming in and going out then you tend to spend money willy-nilly and that's when you start using credit. You start using your credit cards and your overdrafts at the bank because you're not really used to working within a budget. If you don't set yourself limits then you're not going to stick to them. It's quite usual, unfortunately, that one of the reasons why people get into debt is because they have had children and not been able to plan financially".

The director also asserted that there was a need for Britons to "understand their finances better and not spend everything that they earn". Consequently, he suggested that the creation of a budget can help families identify which areas of spending could be likely to change if they have another child. In addition, new families were also urged to consider how much expenses such as nappies and clothes for their newborn would set them back.

Yet those consumers who find they have unmanageable amounts of money to pay back on their borrowing were advised to seek help as soon as possible. As such people are likely to be required to make "difficult decisions" as to how they will reorganise their finances, the Thomas Charles director stated that "it's always good to do that with somebody you feel comfortable with". Once again, consumers struggling to cope with a rise in living costs were recommended to create a list of their expenditure and then create a budget to help them rein in their spending.

Mr Falla's comments come after the Cost of a Child survey released by Liverpool Victoria shows that parents are spending many thousands of pounds on the cost of bringing up a child. According to the financial services provider a total of 180,137 pounds - or 8,578 pounds a year - is being spent by mums and dads when raising their offspring to the age of 21.

However, those who are finding that they are particularly struggling with the cost of having a family may wish to opt for a low-rate loan. When scouring the market for such a product, however, the Thrifty Scot advised borrowers to be aware that the headline interest rate advertised may differ to that they which they may pay in reality. As a result, consumers were urged to research into prospective borrowing as much as possible and ask loan lenders about how much interest they may be charged if they miss any repayments.
About the Author
Mark Dawson writes for Loan-Arrangers .co.uk where visitors can compare loans online. Then apply for the best secured loans and bad credit loans available
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