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Pregnancy: how can it affect your finances?
One of the most common reasons that people experience financial difficulties is because of changes in their circumstances.
Of all the changes that can occur, one of the most significant is when they begin a new family or add to their existing family with another child. Not only can it mean another mouth to feed, or someone else in their household who needs to be clothed, but then there is a Christmas and birthday presents, not to mention the cost of buying a new pram and cot and all the other paraphernalia that goes with having a new baby. Then there may also be the loss of income that flows from maternity leave or the cost of paying for child care.
In these circumstances, it’s not unusual for people to begin to experience financial difficulties. Bills and other financial commitments can quickly grow and where they may have previously been manageable, quickly can become unmanageable.
So what can you do?
To help families who find themselves in these circumstances, the Scottish Government has launched a new social security benefit through its Social Security Agency, which will replace the UK Government’s Sure Start Maternity Grant. The Best Start Grant will include a Pregnancy and Baby Payment, which will provide cash payments for parents from the 24th week of pregnancy up to six months after the baby is born.
If successful, what do you get?
The benefit is available to anyone to apply for, providing they satisfy the eligibility criteria, which is:
- They must live in Scotland and have reached the 24th week of their pregnancy; or
- Had a child within the last six months; and
- They must be the parent of the child, or their legal carer and apply before the child is six month’s old.
In addition to this, where they are 18 or over, they must be able to show they are in receipt of one of the following qualifying benefits:
- Child Tax Credit;
- Universal Credit;
- Income Support;
- Pension Credit;
- Working Tax Credit;
- Housing Benefit;
- Income-based Jobseekers Allowance (JSA), not ‘contribution based’ JSA;
- Income-related Employment and Support Allowance (ESA), not ‘contribution based’ ESA.
Even if they are working they can still qualify, providing they are in receipt of one of the above benefits.
Where they are under 18, they can apply themselves or alternatively if someone else is receiving Child Tax Credits, Child Benefit or the Universal Credit Child Payments for them, they can apply on their behalf.
What do you get if you are entitled?
If they are successful in applying, they will receive £600 for the first child and £300 for any subsequent children. This improves on what was available under the UK’s Sure Start Maternity Grant. That only paid £500 for the first child and only allowed payments for subsequent children when someone was having twins or multiple births.
Where the mother does have twins or multiple births, then under the Scottish Government Scheme, they receive £600 for the first child and then £300 for every subsequent child. They also receive an additional £300 for having more than one child.
Additional payments of £250 will then be made when the child is 2-3 years old and then again when they start school. These payments are to help with the costs of early learning.
What else can you do?
Even though the Pregnancy and Baby payments will make a significant difference for many families and help them with the big one-off expenses of having a child, it won’t change the fact that if a household is financially over-committed because of a new child, it will remain financially over-committed.
In such situations, it is necessary to address this over-commitment and try and balance the household income and expenditure, so household expenditure is not exceeding household income. The most effective way of doing this is by to complete a budget and write down what is coming in and out of the household.
If balancing the budget is not possible, then it may necessary to seek advice on what other options are available. Where there are debts, for example, it may be wise to have a chat with a money adviser or insolvency practitioner and consider if remedies like the Debt Arrangement Scheme, Protected Trust Deeds or bankruptcy may be the correct option for dealing with financial over-commitment.
Fortunately, if someone does enter one of these solutions, the Pregnancy and Baby Payments are protected and cannot be taken off them to pay their debts, as that is not what the Scottish Government intended. To make sure this didn’t happen, they drafted the legislation in a way that means it is protected.
The Scottish Government’s Pregnancy and Baby Payment can be applied for here.
If you are struggling with the cost of having a new child and can no longer keep up your payments to your debts, speak with a Carrington Dean adviser for some free, confidential advice on 0808 2085 195.