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How I prepared my finances for maternity leave

Financial Planning Writer Laura Burridge shares her experience as she plans to welcome her first child.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This month we’re shining a light on maternity leave and how you can plan your finances around your leave.

I spoke to our Financial Planning Writer Laura who’s about to welcome her first child.

Although Laura’s tips can be inspirational and helpful, they aren’t personal advice. If you’re not sure if something is right for you, ask for financial advice.

Preparing your finances for a maternity leave

"The most important thing before you take maternity leave, is to plan your finances in the run-up. At first, money was a big worry for me, because I hadn’t put the time into figuring it out.

Then I began worrying about how I’d maintain a good standard of living while not working – I didn’t want financial strains to impact how I spent my time during my maternity leave. I wanted to make sure I had the means to enjoy my time off with my baby.

As soon as I spent a bit of time working it all out and coming up with a plan, it made me feel like it was much more doable. I started working out how much I might need during maternity leave, how much I needed to be saving now, and what I’d need afterwards.

I’ve made sure that when I go on maternity leave, I’ve got enough in my savings to cover all my essential expenditure – like my mortgage and monthly bills for the time I have planned off. As well as a bit extra. That way, the maternity pay I do get every month can be for enjoying my time off without restrictions or worry."

But some people might not find themselves in this position and their maternity pay might be used to pay the bills.

Whether you’re taking leave to have a baby or not, we usually suggest having three to six months’ worth of essential expenditure saved in an account if you’re still earning an income. If you’re not working, it’s sensible to have one to three years’ worth.

Don’t forget your pension when taking maternity leave

"I’m lucky enough to work in financial services and have some amazing women around me who have given me little tips along the way.

I’ve had lots of emails saying I should consider maximising my pension contributions before I go.

Women typically take on a Motherhood Penalty when having children. Women typically return to work part-time, or even not at all. By taking long amounts of time out of work, coupled with returning on a smaller salary, our pensions can take a blow.

When you add the pay gap into the mix, it’s no surprise that women typically retire on less than half the pension of the average man."

One solution is to make sure you’re contributing as much as you can afford into your workplace or personal pension before your leave starts, as well as if or when you go back to work. You’ll still be contributing to your pension when you’re on maternity leave, but by making the most of your contributions when you can, this can help you build a buffer if you don’t return to work as soon as you’ve planned.

If you’re worried about not having enough in your workplace or personal pensions, you could look to falling back on your State Pension in later life.

But lots of women might not meet the requirements to get the full amount. This is because you’ll need 35 years of National Insurance (NI) contributions to qualify. If you have long gaps in your NI record and didn’t receive National Insurance credits (you could receive these if you were receiving Statutory Maternity Pay, Maternity Allowance, or Child Benefit for a child under 12 for example) for all of it, you can usually make voluntary contributions. This can help to close any gaps in your record. You can usually make contributions up to six years after you’ve taken a career gap if you’re eligible.

When it comes to your personal and workplace pensions, they’re designed for later life, so you usually can’t access them until you’re 55 (rising to 57 in 2028).

Talking about your maternity leave

"Talking about money really feels like the last taboo. But everyone worries about money and what is best to do with it – so you won’t be the only one thinking about your finances.

It’s something we need to do more of. I found that when it came to my own plan, saying it out loud to other people, like my Mum and partner, helped me to check that my plan was logical and not a silly idea.

I’ve found that just talking to people has reduced my worry and I’ve got a lot of great tips along the way. From making sure I sign up to the benefits available to how to scan charity shops for some great finds.

When it comes to who to talk to, you’d want to talk to the people your maternity leave could potentially affect, like your employer and your partner or significant other.

I’ve spoken to HL about how pay will work in my circumstances and that allowed me to list out exactly what I’ll be paid and when, for the entire time of my leave. I’ve also talked about what might happen when I return to work, so we can both plan for that.

I’ve also had frank talks with my partner. There might be a time where I can’t contribute to everything in the way I do now, so we’ll need to rebalance. Make sure both you and your partner know the detail of how your income will work in your circumstances so you can plan what works together."

My 3 tips for anyone preparing for maternity leave

"Once you start having those conversations about money and maternity leave, you could get some great tips from people who’ve been in the same position. This can help make you feel better about starting the conversation and getting it out there yourself.

But if you’re not sure where to start, this could help:

  1. Talk to others who have been through it to get their views on what worked well for them and what they might have done differently.
  2. Talk to your manager about what you want with your career if that’s your focus. I was worried about being left behind while on leave and struggling to fit in when I got back. I know I want to continue to progress my career, so I made sure they knew this.
  3. Talk to your HR department. They can help you to work out things like pension contributions and holiday allowances which takes some of the pressure off you doing it yourself."

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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