Everybody has different circumstances, but your income will probably reduce when you go on maternity leave. Grants, Statutory Maternity Pay (SMP), enhanced maternity packages, no monetary support; it’s a lottery. But regardless of your individual financial circumstances, if they’re changing then your bottom line is bound to be impacted. So how can you mitigate the impact of this change? Can you budget for maternity leave before you have a newborn in your arms? Here are my tips:
1) Work out your overall maternity leave income
If you’re planning to take a whole year off then calculate your total income over that period. You can then divide that number by twelve to work out your average monthly income will be.
It’s up to you how precise your calculations are. I decided not to include holiday pay in this figure, as I thought it would be good to use this as wiggle room in case I did overspend.
2) Budgeting is essential
Once you know what you’ll be getting, work out your average weekly earnings and make a budget. Some people don’t bother, but unless you want to run out of cash eight months in, I suggest you sit down and do the sums. My free interactive budget planner will help.
You can work out what your fixed bills are and estimate the cost of additional items that are likely to crop up during your maternity-leave period. You will need to buy some things and you might want the odd coffee, or to attend baby classes, so account for it beforehand. This should also help you to work out how much money you need to save for maternity leave.
Working out how to financially plan for maternity leave is a personal thing. But I decided to set up a maternity leave budget spreadsheet. It wasn’t anything fancy, just a place to log the figures. It was also handy to be able to tweak them as things evolved.
If you want to save for your baby’s future, make your plan before your maternity period begins.
3) Check your figures – especially if you’re getting more than statutory maternity pay
If you’re lucky enough to get enhanced maternity pay through your employer, then check your company’s handbook to find out what your entitlement is. Find out if there are any additional maternity benefits too, as you won’t want to miss out.
If you’re entitled to extra cash through your employer, you should consider sending the figure to your work’s HR department. It’s likely that the head of payroll will be processing your maternity leave pay, so then ask them directly if your calculations are correct. If you do this and they know you’re on the ball, then they’re bound to take extra care to ensure your pay is right when the time comes.
If you’re going to get statutory maternity pay, then use the maternity pay calculator on the UK government site. This will provide you with the most up-to-date figure, as the rate varies from one year to the next. Once you’ve worked out what you’ll be getting, ask somebody to double check it. This could be your partner, your pal, or the lady at the Citizens Advice Bureau. You need to be clear of your rights and it’s always best to get a second opinion so you definitely know that you’re getting what you’re due.
4) Consider shared parental leave – and have the conversation at the start of pregnancy
Some parents choose to have shared parental leave. This means that you share the time off to care for your child. If this option is something can could work well for your family, then you should discuss it early on into your pregnancy. That way, you have time to tweak your plan and you can both get the wheels in motion when the time is right. If you give yourself time, you’ll both have ample time to plan how it will impact both sets of finances.
5) Work out how to make money on maternity leave
If you’re concerned about the figures, then you may be thinking about how you can make money on maternity leave. My first piece of advice here is not to put too much pressure on yourself. Babies are hard work. Maternity leave is a period of change. And you will have your own set of struggles during this period. That’s not to say that you can’t earn any extra cash though. It’s certainly possible.
Some extra ways to make money on maternity leave may include:
- Selling unused items and things your baby has grown out of
- Start a lifestyle blog
- Launch a craft business
- Make extra money online with Prolific surveys
- Get some free money
- Get paid to write
- Set up a new business
6) Save your holidays until the end
If you’re in employment then you will still accrue holidays and bank holidays (if you usually have them off) whilst you’re on maternity leave. I decided to take my holiday entitlement at the end of my maternity leave period. By that point, I was happy to receive some extra money.
7) Pay yourself
It’s possible that the amount of money you will receive on maternity leave will vary each month. If I received more than what I’d calculated my average monthly income to be then I saved the extra in a separate account. If I received less pay one month, then I topped it up.
By saving and paying myself at a future date, it meant that extra money (which I’d actually already accounted for) wasn’t spent.
8) Consider KIT days
If you’re in employment then you can work up to 10 Keeping In Touch (KIT) days during maternity leave. They are completely optional and both the employee and employer need to agree to them.
KIT days will provide a boost to your maternity leave income. They will also enable you to find out what’s been happening at work whilst you’ve been away and you can test your childcare arrangements before the big return to work.
Personally I can’t recommend KIT days enough. As well as boosting my income, they helped me to feel more confident about my return to work.
9) Be honest about your budget
It’s overwhelming coming up with a budget for maternity leave and sometimes, no matter how hard you try, you can’t get the numbers to work. So if you’re wondering how you can make statutory maternity pay work, or how to afford your maternity leave, rather than worrying, confide in your partner, a friend, or a professional.
One of my friends was worrying herself sick about the bills, but she didn’t want to ask her partner to up his share. Your partner might not be in a position to pick up extra bills, but if you’re in a relationship then it’s a problem for you both to solve, so don’t face it alone. Dad should also make sure his finances are all in order and that his paternity form is filled in.
It’s okay to feel overwhelmed before your baby arrives and it’s okay to ask for help if your budget isn’t working.
10) Enjoy your baby
Having a baby is an amazing experience. Yes, it can be stressful at times and it comes with its own unique set of worries. But you should try to enjoy your maternity leave with your baby as much as possible. This time is precious, so get your finances sorted and allow yourself to enjoy the time.
What else can I do?
There are other things that will help if your books aren’t balancing. You can make sure you stick to a strict list of essentials when buying maternity wear and I also saved money by buying second-hand baby items. It’s also possible to keep costs down during maternity leave, as there are plenty of ways to keep your baby entertained without having to buy specific equipment.
However you decide to do to balance the books, it’s important that tackle it, so you can concentrate on your impending arrival, relax and decide what to call your baby. Once your little one is here, try to focus on enjoying your maternity leave experience. Everybody I speak to agrees that it goes quickly and before you know it, you’re navigating returning to work.