Having a baby is one of life’s big milestones, and whilst it can bring a lot of joy and excitement, we shouldn’t be afraid to admit that it can also be one of the most daunting for many parents. From learning how to care for your baby the first time to having the right support whilst you adjust to becoming a new parent, this new chapter can be challenging, not least when it comes to personal finance.
If you’re worried about the financial impact that going on maternity leave will have and how to budget during maternity leave, here are five top tips that can help you sort your finances.
Check what your company's parental leave policy and pay is
As you start to plan financially, your first port of call should be to check with your employer how much maternity or paternity leave you’re entitled to and how much you’ll receive. Most businesses will offer statutory maternity pay, at the least, but some offer packages such as three months at full pay and three at half, or even six months or more at full pay.
Statutory Maternity Pay (SMP) is paid for up to 39 weeks. SMP means you’ll receive 90% of your average weekly earnings (before tax) for the first 6 weeks, and then £172.48 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks. SMP is paid in the same way as your wages (for example monthly or weekly) and it’s worth bearing in mind that Tax and National Insurance will still be deducted.
It’s also worth checking Nugget Savings to see if the parental leave your company offers is in line with some of their main competitors. Nugget has over 700 parental leave policies you can browse through. Check that your workplace is offering industry standard, and if not this would be a good opportunity to start negotiating a better parental leave package.
Once you have an idea of the amount you're entitled to, this will help you to work out a budget and if you’ll need to save before you start maternity leave.
Check whether you're entitled to any additional benefits and support
If you’re worried you won't be able to survive on maternity pay, you should check if you are entitled to any additional benefits from the government using the Turn2us benefits calculator.
It’s also worth finding online communities where you can get additional support - we recommend following Pregnant Then Screwed and Maternity Action on Instagram. Nugget Savings also offers the Nugget Community which is dedicated to supporting you on your maternity leave and offers discussion forums, tips and advice to help you financially prepare for your maternity leave.
Start setting aside a parental leave fund whilst you're still working
Another way to save money before you take maternity leave is to save a portion of your salary whilst you’re still working and assess what you can cut back on in the run-up to your leave.
Aside from cutting back on obvious things to help you save (buying lunches out and unnecessary subscriptions), it’s worth considering if you can have an open conversation with your employer about increasing your work-from-home days if you go into an office, as commute costs can take a huge chunk out of your salary which could help you set aside more money.
Additionally, it’s important for your partner to contribute savings into a parental leave fund so you’re both shouldering the costs together. Make sure you agree on a minimum amount to contribute per month without fail.
Have a discussion about your joint finances with your partner
If you haven’t already, now is the time to start having a conversation with your partner about finances. It’s wise to talk through how much you both earn, what your personal expenses are and reassess your joint account contributions, as well as both be saving into a parental leave fund. If your partner does earn more, could they increase their contributions to your joint account temporarily, until you return to work?
It’s also important that your partner is reviewing their personal finances in the same way you are, and cutting back on any unnecessary expenses which could help them to save to support you both financially during parental leave.
Review your finances and prioritise the necessities
As mentioned previously, it’s important to cut back where you can to help you save for your leave. This will only be temporary and it doesn’t mean you can’t still enjoy a date night with your partner or dinner with your friends, it just means re-allocating your funds so that you have financial peace of mind in those first few months of becoming a new parent.
Things to consider cutting back on are:
•Takeaways and buying lunches out at work
•Subscriptions you no longer need or use
•Shop around for cheaper insurance
•Shop at a cheaper supermarket
•Save money on utility bills by switching providers
It’s also worth noting that some mortgage lenders will allow a mortgage holiday while you’re on maternity leave. As a mortgage is usually a large bulk of your income, it’s with your mortgage provider and see if this is something they’ll offer as it could make a big difference to your monthly outgoings.
For more information about preparing for your maternity leave, visit https://www.nuggetsavings.com/
About the expert
Kate Guild is the co-founder of Nugget Savings. Katie has a background in tech sales and a degree in politics. She feels Nugget is the perfect blend of her passion for feminism and building businesses.