Worried about how you will afford your maternity leave?
Taking the time out from work for as much as a year can leave a big dent in your finances, especially if you are the primary wage earner.
But plenty of parents do it, survive it and find that actually they didn’t have to find too many compromises to make it work.
With my own two maternity leaves I was extremely fortunate to have very generous maternity pay from my then-employer. They paid full salary for the first six months, which then went down to half for the next three months. This meant I had just three months of my maternity leave where I wasn’t receiving any salary.
I still had to budget and plan ahead of time for those months where I wasn’t receiving as much salary as I was used to and beyond, but it definitely took the pressure off.
But not all companies offer the same maternity pay package. Some use the government statutory maternity pay, which may work out less generous than other contractual maternity pay schemes.
For this reason its really important to check out exactly what your employer will be paying you during your maternity leave, and for how long, as soon as you can.
As well as how much money you will receive from your employer, its worth checking on what their policy is regarding your return to work. Some offer the same job you left after one year off work for maternity leave, while others only guarantee your same job for nine months. If you are off for longer than that they need to find you a suitable similar job instead.
Once you have all of the information, then you can start to figure out exactly how long you will take off work once baby is born, whether you will use any shared parental leave (more on that later) and how you can cope with the salary drop during maternity leave.
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How much is statutory maternity pay?
Statutory maternity pay is paid for 39 weeks and comes from your employer. What do you get:
- For the first six weeks you receive 90 per cent of your average weekly earnings, before tax.
- For the next 33 weeks your receive £151.20, or 90 per cent of your average weekly earnings – whichever is cheaper.
You can get statutory maternity pay from your employer as long as you have worked for them in the 15th week before your baby is due, and have worked for them for at least 26 weeks before that.
Your average pay, before tax, should also be at least £120 a week to qualify.
You can check your work dates for getting statutory maternity pay on this handy Citizens Advice calculator.
What is shared parental leave?
Shared parental leave in the UK enables parents to share up to 50 weeks of leave and 37 weeks of pay between you, after an initial two weeks of leave that is compulsory for mothers.
This is instead of the traditional 52 weeks of maternity leave and just two weeks of paternity leave that most dads were offered.
The benefit of this option is that if the mother is the primary wage earner then she can choose to return to work full-time while the father takes on the full-time baby duties.
Statutory shared parental pay is paid at £151.20 per week, or 90 per cent of your average weekly earnings – whichever is lower.
Of course companies may have a more generous parental leave pay scheme than this – as I said my company paid me full salary for the first six months of my leave.
Shared parental leave was introduced in the UK in 2015.
How to save money for maternity leave
In order to save enough money for a stress-free maternity leave then you need to first work out exactly what you will receive in maternity pay during your time off.
Add that money up and get one figure showing what you will be paid during your maternity leave in total.
Now divide that over the number of months you plan to take off as maternity leave. Compare this to your monthly costs, and the difference between this number and your monthly spending tells you how much you need to save.
The key here is to start planning when you are still pregnant, ideally as soon as you find out. Then you can make small adjustments to your budget early, cutting back on unnecessary expenses, so that you can top up your savings in preparation for maternity leave.
How much should you save for maternity leave?
Expectant parents should save enough money to cover the shortfall in salary created by statutory maternity pay and to cover months when you will receive no pay if you do take the full year off as maternity leave.
Say for example you decide you need to save £2,000 to cover the shortfall between maternity pay and your non-negotiable monthly expenses (such as rent or mortgage).
If you are six months away from your due date, then you need to put away £333 per month from your salary.
Of course you may be able to get away with saving less if you can cut back on your monthly budget. You may find your spending on things such as meals out, alcohol and new clothes reduces during maternity leave, as you are focused on your baby.
It’s also important to take into account how your monthly budget will have new pressures when the baby arrives.
You need to save enough to cover the upfront costs of having a baby, such as a cot, car seat and pushchair, and the monthly costs, such as food and clothes.
In my article on how much it costs to have a baby in the first year I found the average amount you will need to spend on baby before they are born is £1,200 and the monthly cost is £95 depending on factors such as whether you are breastfeeding.
Can I get maternity pay if I don’t work?
You cannot get statutory maternity pay if you do not work but you may be able to get maternity allowance.
You will be eligible for maternity allowance for 39 weeks if:
- You are employed but cannot get statutory maternity pay
- You’re self employed and pay Class 2 National Insurance
- You’ve recently stopped working
You can find out more about whether you are eligible for maternity allowance on the gov website.
How do I survive financially on maternity leave?
Start planning right now
It’s never too early to start planning your maternity leave budget.
If you are trying for a baby then start up a savings account right now where you can begin to put aside cash in expectation for your little arrival. Start thinking about elements of frugal living you could adopt in your life.
Once you have a positive pregnancy test it’s time to start your planning. Even if you haven’t yet sat down to work out all of the numbers, it’s worth getting that savings account open and underway now. The more you can pay into that, the less you will have to worry during your time off from work.
Save up your holiday
I hardly took any days of holiday during my pregnancies.
I then added all of these days up and used them at the end of my maternity leave, which gave me a nice chunk of extra time off with baby that was paid.
Whether your employer allows you to take all of this holiday in one go may depend on their flexibility and policies. Double check with them first to make sure you will be able to do this.
Make a checklist of baby essentials
The baby industry is big business! There is a ton of stuff on the market, and so much of it is stuff that you just do not need to be spending your money on.
If you don’t have other children then it can be tough to decide what stuff is actually essential and what stuff isn’t.
As a rough guide, before your baby is born you really only need to focus on the bare basics which are:
- Bed and bedding
- Car seat
- Feeding items – for example bottles if you are formula feeding and a breast pump if you are breastfeeding
- Care essentials – this includes things such as nail clippers, bubble bath, a hairbrush, towel and thermometer
Before your baby is born stick to the essentials only. Once your baby is here you can decide if you really need additional things such as cute night lights and noise machines promising better sleep.
There’s a complete list of baby essentials on this post.
Be clear with family and friends about what you need
Most people will be thrilled to buy you gifts to celebrate your new baby.
So that you don’t end up with 50 blankets and no bedding from your baby shower, it’s a good idea to try and direct people on what you actually need.
They are likely to ask you what stuff would actually be useful. If you have friends organising a baby shower for you, then tell them you have a checklist of essentials you need and they could distribute that among the guests.
By getting your friends to gift you the stuff you actually need to buy, then you can save money you would have spent on essentials and put it towards your maternity leave.
Cut back on unnecessary expenses
To help make up any shortfall in your monthly budget its a good idea to look at areas you can cut back on.
One obvious one is going out, which you probably won’t be doing that much anyway when you have a new baby.
Takeaways can also be a huge expense that add up to a lot at the end of every month, so consider whether you can reduce this to a monthly or bi-monthly treat.
Another way to save cash on your monthly budget is to haggle with your TV entertainment package provider. You won’t be able to get Netflix to cut their monthly membership cost for you, but you have a good chance of convincing Sky to give you a temporary discount on your monthly bill.
I’ve had success with this in the past by telling them the current package is too expensive for me. It helps if you research competitors and find a deal that’s better than what you pay now. Tell them you are thinking of leaving, and this usually leads them to offer some kind of discount.
Start meal planning
If you don’t do it already then meal planning is a brilliant and easy way to start saving money on your weekly expenses right now.
Think through what your meals for the week will be and aim to visit the supermarket or get a grocery delivery just once.
By doing this you will plan ways to use all of the ingredients you purchase plus you will avoid visiting the supermarket multiple times in one week which often leads you to spend more (especially if you visit when you’re hungry!).
There are lots of tips to slash the cost of your food shopping from Reduced Grub.
Switch energy companies
Some people may save £200 or more per year simply by switching energy provider.
It’s a job that may take a couple of hours to research and then organise, but it’s well worth it for the saving.
Consider shared parental leave
As explained above, shared parental leave can work really well if the mother is the primary wage earner, or if she doesn’t want to take too much time away from her career.
Have a think about whether shared parental leave can work for you. The beauty of it is you can decide on how much time each of you may take, there’s no set rule about how you split the leave.
Start a side hustle
Is there anything you can do to bring in a little extra income working from home while you are with the baby?
Double check your employer contract before you do this, as some employers may not allow you to do any other work while you are on paid maternity leave.
If you can go ahead without risking upsetting your employer, then have a think about things you could do around your baby.
Blogging is a side hustle I started during my second maternity leave, but this is not a way to earn money overnight. I would say it takes at least six months to start seeing any money come in and even then it won’t be a good earner for another year.
You could try making things to sell on Etsy or seek out freelance work such as writing, proofreading or bookkeeping.
Use cashback sites
Whenever you make a purchase online it’s worth doing it via a cashback site wherever you can.
Cashback sites work by paying you money for making purchases from brands via their links. The cashback site earns a commission on the purchase, and they share part of that commission with you.
Many big name brands are connect to cashback sites such as Quidco, so get set up with one right now!
Declutter and sell your stuff
You can make a good amount of extra cash fast if you sell old clothes, devices, and furniture that you no longer need.
Start by decluttering and taking stock of what you have.
You can sell stuff on eBay or Facebook Marketplace. I prefer Facebook for selling larger items such as furniture, as you can use the local buy and sell groups and ask the buyer to come and collect the item.
eBay of course offers this option too, but I’ve found items seem to sell much quicker on the local groups.
Try survey sites
You won’t make your millions using online survey sites, but it’s a nice way to earn a few extra pounds every month.
Survey sites pay you for taking time to fill out or participate in surveys.
They great thing about these is you can do them in the comfort of your home while caring for your baby.
My favourite survey site is Prolific. This site connects survey participants with research academics. Surveys pay between as little as 20p to as much as £4.
The more time you put in with survey sites, the more money you can make.
Use your KIT days
KIT, also known As Keeping in Touch days, are paid work days where you return to your job during maternity leave.
You can take 10 during your maternity leave. They are really useful not only for gradually easing back into your work but also because they are paid they are a welcome bit of extra cash.
How to work out your maternity leave costs
Before you start to panic about whether you can afford maternity leave it’s important to write out all of your costs and figure out exactly where you stand.
Start off by noting down what income you will receive both before and after your maternity leave begins. Remember to note down:
- Your monthly salary. Note down what you will earn per month up until your maternity leave begins and what your pay will be during maternity leave.
- Note down any child benefit you will receive if you are eligible once the baby is born.
- Add in any other benefits you may receive such as income or housing support.
Now move on to write down the costs that you will have. In this list you need to include:
- Your monthly bills that are fixed. This includes mortgage or rent, utilities such as gas and water, phone bill, TV, and credit agreements such as your car or phone.
- Consider your monthly savings too and treat these as a fixed cost, like your mortgage.
- Annual costs. Don’t forget to note down the bills you get once a year. This will include things like your car’s MOT, service and car tax.
- Your living expenses. This includes things like petrol, food, clothing, subscriptions, holidays and entertainment (such as meals out and takeaways).
- Calculate how much you will need to spend on items for your baby. Work this out as both a fixed cost budget you will need to buy essentials stuff for your baby and the monthly cost. I have a whole post about how much it costs to have a baby in the first year that does the hard work for you on this!
- Don’t forget to add in a budget for unexpected costs, such as a boiler breakdown or massive car repair bill. You never know when this may happen so it’s always worth planning for a rainy day.
Once you have all of this written down you can start to see exactly where you stand in terms of the difference between your pre-maternity leave income and maternity leave income.
Then you can start to address your monthly spending and see where you can cut costs, if you need to.
There is a great baby budget calculator over on the One Family website to help you figure this out.
Budgeting for maternity leave
This is everything you need to know to afford your maternity leave.
The most important piece of advice you can take away from this should be to plan, plan and plan some more.
Go into your maternity leave with your eyes wide open about your financial situation and stick to your budget.
For my own maternity leave I spent less on going out and clothes, but ended up with whole new areas of spending such as baby clothes and formula.
Being at home more also meant that our food bill went up by a little, as I was snacking and cooking nice meals wherever I could. But this was all balanced out by huge savings on the other areas of our social life.
So the key is to plan ahead, and keep an eye on your budget throughout your maternity leave, and you will be just fine!