Parents across the UK are facing “worrying” levels of debt – and financial experts believe it’s only going to get worse amid the cost of living crisis.
Research conducted by Creditfix revealed that, of the 143,000 people who were helped by the personal insolvency provider between January 2016 and July 2022, those with children under 18 had an average debt level of £17,402.
In comparison, the national average debt level is £15,998.
Layla Johnson, regional manager at Creditfix, said almost half (47%) of their customers are parents – and data shows that the additional costs of parenthood are increasing the levels of debt being taken on.
“The rising cost of living means that we are expecting to see this additional strain continue to take its toll on households,” she warned.
“The figures across the UK paint a worrying picture – we know that mortgage and rent costs are increasing for many, alongside other essentials like energy and food bills.
“In this climate, parents are confused and desperate – and forced to make difficult decisions about what to cut out in order to make budgets stretch as far as possible.”
HuffPost UK previously reported that, as the cost of living bites, some parents are having to resort to using candles at night in order to save on electricity.
The new report suggests the “crippling” cost of childcare plays a big part in parental debt. The average cost of putting a child in nursery part-time is over £7,000 – this increases to a little over £14,000 for placing a child under two in full-time care.
“Unfortunately, childcare costs have continued to rise in recent years, especially for those working full-time jobs,” said Johnson. “A lot of parents aren’t in a position to pay these rising fees and this can put a real strain on family life.”
Jennifer, who preferred not to share her surname, said she is “dreading” going back to work from maternity leave because she has £2,000 per month childcare costs to fund.
When her first child was eight months old she became a single parent and bore the brunt of childcare costs.
The 37-year-old from Dorset said: “I wasn’t prepared for how expensive childcare would be. I had to rely on credit cards and loans and eventually found myself in around £8,000 of debt before I decided to get help through an IVA [individual voluntary arrangement].”
Jennifer has since remarried and – together with her husband – has a blended family of six children, ranging from their youngest who is seven months old, to their eldest who’s 17.
“After being on maternity leave again I’m due to go back to work soon, but with nursery fees increasing our childcare bill is set to soar to around £2,000 a month, on top of other rising costs such as energy bills,” she said.
“To keep our head above water we need to be earning more than minimum wage – but to get the qualifications to do that we’d also need to spend more money.
“We’re encouraged to ‘better ourselves’, but it’s just not possible in our current situation. A job advisor even suggested that we should assess how cost effective it would be for me to go back to work.”
Childcare aside, there are lots of extra costs that go into raising kids – from the expense of buying all the kit for a new baby, to the cost of keeping them fed and clothed over the years.
“As a new parent, you have so many extra costs. Essentials like nappies and baby wipes are expensive, and you can spend a fortune on baby chairs and cribs, which they grow out of quickly,” said Danielle, a 32-year-old mum from Essex.
“Although it’s easy to pick them up second-hand, there’s still a cost.”
Danielle’s debts spiralled when her daughter, who is now two, was born. “I already had a three-year-old son, and I thought they needed the best of everything – including the latest fashion clothing and gadgets,” she said.
“What I now know is that all they need is a warm home and love.”
Danielle’s story is sadly far from unique. Research commissioned by Ergobaby UK found more than half (56%) of new mums and dads ended up in debt due to unforeseen or unplanned costs associated with their first baby.
“I bought a lot of things from catalogues that my daughter didn’t really need, and eventually reached the point where I owed £9,500.”
– Danielle, 32
Of those surveyed, 23% of parents had borrowed money from family to meet the costs of their baby, while 28% relied on credit cards to make purchases.
“I bought a lot of things from catalogues that my daughter didn’t really need, and eventually reached the point where I owed £9,500,” said Danielle.
“I know from my own experience that it’s really hard to ask for help. You feel embarrassed that you’ve managed to get yourself into so much debt but there’s so much support out there.”
If you’re worried about mounting debt, you can access free advice through Citizens Advice, the charity Step Change, the Money Advice Service and National Debtline, who can help you to prioritise your payments depending on your individual circumstances, and work out ways you might be able to pay off your debts.
If you live in England or Wales, you can also get temporary protection from your creditors while you get debt advice and make a plan through the ‘Breathing Space’ scheme.
Danielle is now paying off her debts in manageable amounts through an IVA – where she’s agreed to make regular payments to an insolvency practitioner, who then divides this money between her creditors.
“Life is really difficult for families at the moment, and I’m concerned about the cost of gas and electricity and whether I’ll be able to keep my children warm this winter,” she said. “But at least I’ve got my spending and debts under control.”
