Having a baby is a very exciting time, however it is also undoubtedly very expensive. There are extra one-off costs such as a pram or car seat as well the likelihood that your household income will change once your baby arrives and you have to take leave from work. It is therefore important to plan in advance.
Managing your finances while on maternity leave can be hard as for many people it means a large drop in income for an extended period of time.
Speak to your employer about your options
Your employer may offer an enhanced maternity package which would mean you would receive additional income on top of the Statutory Maternity Pay. It is important that you establish what your employer offers as early as possible as this will give you more time to plan ahead.
If you are not happy with the maternity package (if any) offered by your employer then you could also try to negotiate the terms of your maternity leave before you leave.
What is Statutory Maternity Pay?
Statutory maternity pay is the legal minimum that you can be paid while on maternity leave. In the 2022/23 tax year, the first 6 weeks of your maternity leave is 90% of your normal rate of pay. After that the remaining 33 weeks is paid at £156.66 per week. You have the option to take an additional 13 weeks of leave but this is unpaid.
Below are our tips to manage your finances while you are on maternity leave.
Decide how long you want to take for maternity leave
You will find it easier to plan your finances if you decide in advance how much maternity leave you want to take. If you are taking a full year then you need to remember that 13 weeks of this leave could be unpaid unless your employer offers an enhanced maternity package.
A financial adviser at Four Wealth Management can help you to determine what options are feasible for your budget.
Book a no-obligation meeting now
Start planning as soon as possible
If you are preparing to start a family then you should start planning financially as soon as possible. You should calculate your essential expenditure and how much income you are expecting to have while on maternity leave. You can then plan to save while you are still working to cover any shortfall.
You may have to cut back on some non-essential expenditure but the sooner you start to plan, the more likely you will be to have financial flexibility.
Use your Keeping in Touch days
A ‘Keeping in Touch’ day allows employees to work for 10 days during their maternity leave. These 10 days are paid at their full rate of pay. You can use these to top up your income during your maternity leave.
Use your annual leave
You cannot use your annual leave while you are receiving statutory maternity pay, however you can use your annual leave at the start or end of your maternity leave to give you some additional paid time off.
Start planning now
A financial adviser at Four Wealth Management can help you to budget for going on maternity leave. They can help you to budget for the short and long term to provide financial security for your family.
Book a no-obligation meeting now
