Financially navigating your maternity leave
Amongst all of the many things to consider when preparing for a new addition to your family, financial plans for maternity leave are one of the most important things to make time for. From getting clued up on statutory maternity leave and pay to making a budget and avoiding impulse spending, here are all the tips you need to reduce financial stress and keep your parental leave as enjoyable as possible.
Making your maternity leave and pay plan
Alongside thinking about when to start your maternity leave, how much time to take and when you might be ready to return to work, it’s a great idea to put together a financial plan for leave as early in your pregnancy as possible.
Check whether you’re entitled to maternity pay from your company, and whether you’ll be receiving ‘enhanced’ maternity pay (which could be your full salary or a certain percentage of your usual salary) or statutory maternity pay, which is 90% of your full salary for six weeks, followed by £172.48 for an additional 33 weeks (or 90% of your full salary, if this is lower). If you’re self-employed or have worked in your current role for a short time, you may be entitled to maternity allowance rather than maternity pay - you can find all the information that you need on the government website. It’s also a good idea to check your partner’s paternity leave entitlement, and whether they will receive paternity pay.
It’s important to get as much information as you can about how much you’ll be getting paid, and for how long, as this will inform your budget for parental leave and help you to plan and save early for any shortfall in your income.
Creating a budget for parental leave
Now is a great time to review your household budget, and identify any changes that might need to be made in order to cut costs during maternity leave. Work out the change to your income, and then map out a budget plan for the duration of your parental leave. There may be natural reductions in things like commuting costs, or gym memberships while you’re recovering physically from the birth.
Your socialising costs may also take a natural dip, though the cost of coffees out and takeaways when your baby is tiny can easily creep up. Try to be honest with yourself about the kind of maternity leave you’d like to have, and research the costs of any baby classes or activities you’d like to do ahead of time.
Realising that you’ll need to make changes to your spending once your baby arrives can be daunting, but it’s much better to plan ahead than to be caught out by a super-tight budget later on.
Find ways to save money in preparation for a lower income
If your budget planning reveals that you’ll struggle to manage on reduced pay, or you’d like to make sure that you still have some funds for enjoyment during your time off work, it’s a great idea to start putting some money aside to supplement your maternity pay throughout your leave. Calculate how much extra you’ll need per month, and multiply by the length of your leave - this will give you a savings goal to aim for. Divide that by your remaining time before you finish work, and this will give you an amount to save per month.
As well as cash savings from your current income, you could also be stocking up on loyalty points for supermarkets and other big retailers, or use cashback apps to build up a pot that you can spend or withdraw if things get a little tight during your leave.
Enjoying your leave without breaking the bank
Once you’re through the haze of those very early days with a brand new baby, there are plenty of opportunities to get out and enjoy yourself during your maternity leave. If you’ve made new friends who are also on maternity leave, try to plan for meet-ups that won’t break the bank, such as walks in the park and visits to each other’s houses - they’ll likely be as grateful for the cost-cutting as you will!
You may feel pressure to sign up to lots of expensive baby classes, especially if peers are doing the same, but you don’t need special classes in order to take your baby swimming or give them a sensory experience - these are all things that you can do yourself, at home or in your local pool!
Resist impulse shopping and unplanned purchases
A big challenge as you get to know your new arrival can be resisting the urge to spend every single penny on new outfits and toys for them! Being very tired from lack of sleep can impair your judgement when it comes to impulse purchases, and expensive gadgets become very tempting when they promise you a better night’s sleep or that they will help with your baby’s development.
Online shopping during night feeds can be very dangerous for your bank balance - if you’re finding this to be an issue, you can try removing payment information from your devices so that you’re forced to wait until morning, or keep a running note of things that you’d like to buy instead of buying them straight away. Babies grow so quickly and go through so many phases that your impulse buys might be too small or obsolete by the time that they arrive!
Navigating maternity leave finances can be daunting, but there are things you can do to put your mind (and bank balance) at ease.