Maternity leave can significantly impact your finances and your family finances for new parents, including if you also factor in paternity leave. Add the fact you have the additional expenses of a new baby, and if it is your first child, the likelihood is you will have to buy all those baby items. It’s a time when money and how much money you have are at the forefront of your mind.
Budget For Your Maternity Leave
The majority of us, when we go on employed maternity leave, get the first six weeks either full pay or 90% of full pay (statutory minimum); after that, you will drop to a reduced income, so how do you budget for maternity leave.
Statutory Maternity Pay (SMP) is paid for up to 39 weeks. You get:
- 90% of your average weekly earnings (before tax) for the first six weeks
- £151.97 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks
SMP is paid the same way as your wages (for example, monthly or weekly). Tax and National Insurance will be deducted.
Check out the maternity pay calculator from Gov.UK.
Our Top Tips For The Best Ways To Budget For Maternity Leave
Consolidate precisely where you are with your current finances, including your debts, personal loans, credit card bills and outgoings, and savings account, so you know your current financial situation with your bank account and current household income. This can sometimes feel like a frightening thing, but it will ultimately make you feel in control. It can also be a good idea to see a financial advisor who can help you start your financial planning for your family and will have some great advice to help you now and in the future with financial support advice.
*Remember, this is a family budget and financial plan you are looking at; it is not for you to be making all the sacrifices when it comes to your new addition. It’s for you both to look at your incoming and outgoings. It isn’t fair if one of you ends up worse off just because you are the one on maternity leave with the salary cut.
Setting a monthly budget can be crucial and ensuring you add some wiggle room for any unexpected costs. A simple excel spreadsheet can effectively keep track of your incoming and outgoings including allowing for baby budget purchases.
If you have debt, now is the time while pregnant that you can start to look to make an impact before you go on maternity leave. I am not talking about your mortgage payments, but things like credit card bills or overdrafts making a conscious effort now can help you reap the rewards in the long run. Including consolidating your debt on a 0% interest for a fixed term credit card to ensure all your money goes towards paying your debt.
Look at your monthly budget are there any ways you can cut back further? The likelihood is gym memberships for the next 12 months might not be well used unless they have a creche on-site, so maybe cancel your membership and pay as you go. Shop around for better deals for your current outgoings. Things like Now TV, you can often find you get a heavily reduced monthly fee if you go to cancel. Look at your car insurance; it used to be staying with the same people got you a better deal, but now that isn’t the case, do a check on your home insurances make sure you are on the best deals. Even looking at your food shop there are plenty of ways to cut back and save. Look at supermarket brand nappies, wet wipes they are often so much cheaper than the named brands and those pennies stack up.
Save your holiday time if you can. While pregnant, if you’re able to save as much time as you can with your holidays to allow you to use those weeks before you take your maternity leave. Your maternity leave must start the day your baby is born, not your due date, but many of us go on maternity leave a good few weeks before this happens, so use those holidays before you start your official maternity leave. If in doubt of your holiday used check with your HR department.
You will no doubt have a long list of items you need from car seats, baby clothes, highchairs, cots and general baby supplies. I know how tempting it is to want to buy everything shiny and new and while it’s important to buy certain items new for safety reasons. A good trip to Primark for those early baby grows is a good shout, they will grow so quickly and in those early days you will no doubt have a lot you have to throw out after those famous baby blow outs. Keep your eyes open on Facebook marketplace or mums groups there are often great quality items in great conditions going for sale as babies grow out of things so quickly. Obviously never buy a car seat second hand as without knowing the history of any impacts you cannot guarantee the safety of t the seat.
Having a good clean out and see if you have any items you can sell can be a great way to generate some extra income to add to that emergency fund or just for the little things for a date night once a month.
One of the things to factor in if you are looking to return to work after maternity leave is childcare, if you don’t have family members who live close by you could be looking at placing your child in a nursery or with a childminder or nanny. You also maybe entitled to child care benefit check out Gov.uk to see if you are. For those who haven’t yet looked at the cost of childcare it can be a very expensive outgoing. Use Gov.uk childcare calculator to see if you can gain any help in childcare costs. You will normally be looking at your children turning 3yrs before you receive your free hours of childcare unless you are receiving benefits.
We hope this has helped prepare you on how you can budget for your maternity leave.
# Budget For Your Maternity Leave