The best way to pay for your baby!

A growing family means growing outgoings. But you don't have to get up to your neck in the red to pay for it all.

As I’m discovering, seemingly by the day, having a baby can be an expensive business. But some new research has shown that many of us turn to credit in order to cover those mounting costs.

Up to our eyes in baby loans

A new study by Sainsbury’s Finance has found that over the past five years new parents have borrowed a total of a frankly incredible £2.32bn to fund the various costs of new babies.

Indeed, the research reckons the average parent needs to get together £2,980 to pay for things like decorating a nursery, buying baby clothes, toys, a buggy and all the rest of it. That’s a hell of a lot of cash to be borrowing anyway, but many parents end up borrowing even more for things like car or home improvements.

Are we going a bit over the top? And are we borrowing from the right places?

Make the most of freebies

We have nine weeks to go now until our first child is due, and we’ve done pretty well at taking advantage of freebies. My wife’s cousin had kept a load of her kids’ old sleepsuits and the like, so we’ve got all of those, as well as the cot my wife slept in when she was born.

We’ve also been lucky in that my father-in-law is the most practical man I’ve ever met, and has saved us a small fortune in sorting out the baby’s room (though our weekly spend on teabags went through the roof).

But it’s not just family hand me downs that make life a bit cheaper when getting ready for a baby. We’ve also been making use of sites like Freecycle and Freegle. The sites work in a very simple way – people advertise the stuff they have that they want to shift, and it’s available for free. Obviously, the quality can be a bit hit and miss, but as you aren’t paying anything for it, it’s worth a gamble!

Buying new

However, not everything baby-related can be brought in for free. For example, in our case while we could make use of my wife’s old cot, we still needed to sort out a mattress. Also, while there was the option of going second-hand with the pram, we know that if everything goes ok, this won’t be our only baby, so investing in a decent one that will last us was also a priority.

And that meant heading to Mothercare, Mamas & Papas, and the rest to do some spending.

Get saving

If you know you plan to start a family, it’s an extremely good idea to build up some savings in advance to help cover the costs. That way you avoid getting yourself into debt when that bill for the deluxe pram that turns into a buggy and a car seat arrives.

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A really good way to get started on building up a baby savings pot is to utilise a regular savings account. As the name suggests, with these accounts you have to pay a certain amount into the account each month. In return you get a terrific rate of interest. The current market leader comes from First Direct, and pays an incredible 8% on your money. However, there is a slight catch, which you can read about in Earn 8% on your savings!

However, if you’re a seasoned saver and want to get the best return on your cash, you’d be made to ignore ISAs, as they offer you a decent return on your money, without you having to hand over a penny of the interest you earn to the taxman. For a run-down of the best ISAs around, have a read of Don’t miss the new market-leading savings account!

A bit of light borrowing

However, if you’re not quite so prepared – and sadly, my wife and I weren’t – then you may need to do some borrowing in order to cover the additional costs of getting ready for parenthood.

If you want to make this extra spending as painless as possible, it’s a good idea to use the right card for it. And for most of us, that means a 0% credit card, as it allows you to spread your payments over a longer period of time.

Below are the top five 0% purchase credit cards that should be at the top of your wish list.

*Only available to existing current account holders

However, you can get even longer to pay off that spending by instead using your existing credit card, and then transferring the debt over to a card offering a period of 0% interest on balance transfers. Below I’ve put together the five best balance transfer cards in the market at the moment.

*Only available to existing current account holders

If you’re considering taking advantage of a balance transfer, be sure to have a read of Three top tips for a balance transfer.

More serious borrowing

Personally, I’d be a little concerned about needing to borrow more than I could get from a credit card to cover the cost of a new child. It just seems a little excessive to me, though if your family is outgrowing the size of your home or car then I can see why it happens.

If you’re in the market for a personal loan, the table below rounds up some of the best deals in the market today.

*Only available to existing customers

Of course, it’s worth remembering that lenders only have to offer their typical APR rate to two-thirds of borrowers.

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