Imagine if you had a maternity leave calculator to help you make some informed decisions about Maternity Leave? Wouldn’t it be great if it could tell you month by month what your financial situation would be? What about if it could tell you exactly how much money you needed to save? And to make it even more amazing, imagine if the calculator helped you to track how much you had saved?
Planning for Maternity Leave is SO much more than just picking baby names and shopping for the nursery. Knowing about your money situation is so important too.
After scans and midwife appointments, your number one priority should be to sit down and work out how ‘tight’ money will actually be.
I hear my pregnant friends and colleagues say “oh I can’t commit to that lunch date or go to the movies – I’m pregnant and money is tight”. BUT do they actually know how tight it really is (OR MAYBE IT ISN’T EVEN AN ISSUE)? Had my friends actually sat down and worked through what their income will be on maternity leave? What about their bills and expenses? Do they know and understand how they are going to change?
Having a plan for maternity leave is not about visiting a financial advisor and talking about pensions and investments. It’s about making some simple calculations which will help you to understand your financial situation. Maternity Leave is a time when your income is going to be reduced, your expenses are going to increase and you are going to have the enormous responsibility of having a baby to look after.
These are my Top Ten Reasons Why You Should Have a Maternity Leave Plan.
1. You have enough to worry about
Your number one priority is your own health and that of your unborn baby. The last thing you need niggling away at the back of your mind is money.
Bringing a baby into the world is one of the most rewarding things that you can do. However, babies are a huge financial challenge that is only trumped by the purchase of a house.
Taking the time to make a plan and understand the numbers can put a lot of things into perspective.
2. Feel organised and in control
The strongest memory from both of my pregnancies is the overwhelming feeling that I had to be organised and in control. It was an all-consuming feeling. I constantly told myself “I don’t want this to happen…” or “I don’t want that to happen….”. “What if I can’t…..”
I made lists by the hundred, I planned, I researched and I made countless spreadsheets.
After I made my budget for my first maternity leave, I remember it bought such an overwhelming sense of calm and order to me. I knew exactly how much I needed to save. I knew what months would be tough and I knew how long I really could afford to have off.
3. Maternity Leave income is stable
In the UK we have one of the longest paid maternity leave periods in the World. Unfortunately, when you look at how much maternity pay is, the amount is very low compared to the rest of Europe.
That’s why it is so important to take the time to really understand what income you are going to receive during your maternity leave. Once you know that, you can start to plan for the amount you will receive each month in your maternity leave calculator.
To summarise there is only a set amount of money you can receive while you are on maternity leave. You just need to find out how much of that you will get each month.
4. Your Bills & Expenses are going to change
The average newborn in the UK costs £184 a week to look after! Yes, I was terrified at that statistic too. That is why it is so important to sit down and go through everything you spend your money on.
Not travelling to work will save you a tonne of money but any savings will soon be taken by the little person and their continual demands for money.
I recommend to friends that when they are thinking about their maternity leave budget that they include and extra amount every three months. That allows for those quarterly growth spurts which babies seem to have. You don’t want to be short of money when its time to buy a highchair.
5. You need to know when the tight months will be
You know that money is going to be tight on Maternity Leave. But do you know how tight? Which months will you have extra money? Do you know which months you are going to run out of money?
A month by month plan such as a maternity leave calculator, helps you easily see which months you are ok and which ones you are not.
In the months where you have extra money, save that money in another account for a month when you know that things are going to be tough.
6. You need to know how long you can have off work
The UK allows 52 weeks of Maternity Leave. But did you know that Maternity Leave does not equal Maternity Pay?
Statutory Maternity Pay is paid for 39 weeks. What are you going to do for money for the 13 weeks which are unpaid?
When you have a Maternity Leave plan you can look at the numbers. You can then take a whole world view of what is the right amount of time for you to have off.
7. You need to know what your budget is for setting up the nursery
Imagine if in all the excitement of lists, shopping and baby names you rush out and spend £1,000 on a travel system (or nursery furniture) BEFORE you have a plan for maternity leave?
With Statutory Maternity Pay coming in at around £5,000 – you could have just spent the equivalent of nearly SEVEN weeks of maternity pay. That’s right in one shopping trip you could have just changed the course of your maternity leave.
This is why it is so important to make the plan first. That way you can then figure out how much it is you want to spend on the nursery, clothes and prams.
The baby won’t be any better off or be loved more if they have expensive things. They won’t notice if the nursery furniture doesn’t match. They won’t know if their bath towel is a different print to the curtains in their bedroom. Most importantly, they won’t know if you have bought something second hand for them!
8. Reduce the element of surprise
Babies grow a lot. They change clothes sizes every three months. They need new expensive equipment roughly every three months too. That’s why I tell people to factor in some extra money for months three, six, nine and twelve.
In your plan add in other key events throughout the year which are going to take your money. When you have done that, try to see which ones you can cut back on. Reducing unnecessary spending (even if its just for this one year) is a great way to save money for maternity leave. Once you are back at work there is plenty of time to catch up on those things which you may have missed out on.
9. Get into some good habits
For many people they may have never needed to budget and plan how they are going to spend their money. When your money is your own and the only person to look after is you, bringing a baby into the mix is a very different story.
Using a maternity leave calculator to figure out what your finances look like on maternity leave is a great way to learn how to budget and make your money go further. You have at least 18 more years where the habits you pick up from this exercise are going to be useful!
10. And relax…
Do you know what it’s like when you get everything that is worrying you down on paper? Once you have it all out of your head you can then start to focus on what you can actually control.
Once you have done your maternity leave calculations you can then start to tweak different things to make the picture right for you.
If the amount you need to save is out of your reach, go through your bills and expenses with a red pen. Remember that Maternity Leave is only a year. Could you live without subscription TV for a year? What can you do to get your other costs down (even if it’s only just for this one time in your life)?
Have you considered all of your income? Have you planned to use your Annual Leave, Holidays and Keeping in Touch Days in the right way to earn you more money?
Join my FREE Facebook Group Money Matters for the Mum to Be – Plan & Prepare for Maternity Leave for more tips on financial planning and preparing for maternity leave.