Planning for Maternity Leave

When having a baby you’ll hopefully be entitled to some form of maternity leave and pay. However, deciding how best to use these benefits to support your finances can be difficult. Here’s what you need to know.

The earlier you discuss financial preparations for having a baby, the better. If you end up sinking into debt, you’ll be surprised just how easy it is to lose sight of how joyous a moment like this is. Not a pleasant thought, but true nonetheless.

So, to make the most of all the excitement that comes with this stage of life, make sure you do your share of sober financial planning in advance of your child’s arrival. This way, you can be as love-drunk as you like when you welcome your new addition to the family.

In this article, we tackle some of the most important things you should think about when expecting a new baby. From planning in your maternity (or shared maternity and paternity) leave and budgeting techniques, to your rights at the workplace, we’ve collected a wealth of advice, tips and information to help you prepare.

The average basic cost of raising a child in the UK over 18 years is £75,436 for a couple and £102,627 for a lone parent, according to a report from the Child Poverty Action Group. This increases to £155,142 and £187,120 when childcare, council tax and rent and thrown into the mix!

How much does it cost to have a baby?

The cost of raising a child will vary massively, depending on where you live and your individual circumstances. However, we all have to pay for basic necessities such as food, housing, clothing and education. When you have a child, all these things and more will quickly add up to a considerable sum of money. Preparing yourself in advance for these expenses will help you massively.

The pre-delivery phase

While you're pregnant, you’ll spend a lot of time and money preparing your home and living situation so that it’s ready for your new baby. Even when keeping things to a minimum, essentials like a new cot, bedding, changing table, pram and baby clothes can add up to a considerable amount.

Tip: Spread the word that you’re expecting and borrow pre-loved items (without shame) from friends and family. You’ll soon learn that second-hand certainly isn’t second best and many people will be willing to pitch in.

Early months

After bringing your baby home, you’ll enter into a completely new phase of life, with the daily realities of your new role as a parent absorbing a great deal of your energy. During this period, you’ll spend a large amount on things like nappies, baby food, toys, bibs, new clothes and more. While this won’t be news to you, remember that you’ll probably be spending more money on yourself too.

Late nights and early mornings can leave little time for your regular money-saving strategies and a quick takeaway or an Uber ride here and there might mean you get a few more hours of sleep, and who would blame you?

Tip: Speak to other parents about where they get their baby supplies from and see if they have any recommendations for particular products. Also, try bulk- buying your essentials to bring costs down.

Toddlers and beyond

At this stage, you might be back at work already. This means that as well as the new clothes, toys, food and books to keep your child happy, you’ll probably need to pay for childcare. Parents now pay an average of over £6,600 per year, just for a part-time nursery place, according to the Family and Childcare Trust. If you haven’t factored this into your budget – do it now.

Tip: Consider sharing the load with other parents or ask relatives to lend a hand. Maybe you could take turns sharing responsibilities, while one of you prepares weekly meals? This is a great money saver.

New baby, new approach

If nothing else, you should realise by now that you’ll need a whole new strategy when handling your child’s early years. Clearly outlining your approach before they arrive will help you to worry less along the way. Here are some recommended priorities.

  • Reduce Spending - Before your child has arrived, cut down your spending to a minimum so you have a good understanding about what your essential and non-essential costs are.
  • Pay off expensive debt - When possible, pay down any outstanding debt. Obviously paying off your mortgage is a dream only some of us can afford, but it’s a good idea to clear things like credit cards or overdrafts with high interest.
  • Save more - Saving is always a good idea, but when having a baby, it also creates a safety net that allows you to avoid expensive borrowing when unexpected costs arise.
  • Budget all the way - Start by knowing how much you actually have in terms of income and savings, then plan realistically what you can afford each month. Also, think ‘budget’ whenever you’re planning activities, meals, holidays or… basically anything involving money
  • Think about the next step - A boost in your income could make things a lot easier in the long run. Don’t lose sight of promotions for new job opportunities if they should arise. Being away from your child might be hard, but if you can carve away more time in the future, this may just be worth it in the short term.
  • Cover all your bases - Making sure your home and health are protected with insurance can help prevent the unexpected from derailing your future plans.
  • Look after yourself - Many parents run themselves into the ground in just the first few months of having a child. This might be unavoidable, but eating badly and not paying attention to your mental health isn’t. If you’re strong and healthy, then you’ll be so much more effective at everything you need to do when raising a child.

Paying attention to yourself and the way you feel isn’t selfish; it’s one of the most important things you can do as a mother. If you need support or guidance, don’t feel bad for asking. Ultimately, you have just given birth to a child. This is a huge deal.

Tip: Make sure you don’t have money tied up in poor investments or accounts paying low returns.

More than 1 in 10 women suffer from postpartum depression within a year of giving birth, according to the NHS. Many mothers undergo a range of different mental health issues while raising their children – often undiagnosed.

Arranging your Maternity Leave

Now that we’ve covered some of the basics, we can move on to one of the first important milestones in a new family’s journey: maternity leave. Whether it’s understanding what you are entitled to, planning how to best use it, or trying to stay financially buoyant during this time, maternity leave can seem complicated. But getting it right is incredibly important for all families and can set you up well for what is to come, whether it is life as a stay-at-home parent or if you’ve decided to head back to the office ASAP.

Quick Facts:

Statutory Maternity Leave ( SML )Statutory Maternity Pay ( SMP )
You are entitled to 52 weeks off work.You are entitled to up to 39 weeks of paid maternity leave
You do not have to take 52 weeks but you must take 2 weeks’ leave after your baby is born.You are entitled to 90 per cent of your average weekly pre-tax earnings for the first six weeks.
Ordinary Maternity Leave covers the first 26 weeks. You can return to the same job if you go back to work during this period.For the following 33 weeks, you are entitled to £148.68 or 90% of your average weekly earnings (whichever is lower)
Additional Maternity covers the second 26 weeks. You can return to the same job if it’s available, or a similar job with the same pay and conditions.SMP is paid in the same way as your wages (monthly or weekly) with Tax and National Insurance deducted.

SMP usually starts when you take your maternity leave.

Statutory Maternity Leave ( SML )

You are entitled to a year of Statutory Maternity Leave if you’re having a baby, regardless of how long you’ve been in your job. During this time, you will also be entitled to maternity pay, which is typically claimed at the same time. However, although you can take 52 weeks off work, you will only get maternity pay for 39 of them - depending on eligibility.

What you get

While you’re on maternity leave, you’re still entitled to the standard employee rights that come with your job, such as:

  • Paid holiday
  • Promotion opportunities
  • Information about company changes or important activities
  • Social events
  • Protection from unfair dismissal
  • Pension payments
  • Additional perks and benefits such as gym memberships or medical insurance

Your paid maternity leave can start in the 11th week before your baby is due at the earliest. However, if your baby is born early, your leave will start the day after the birth. While you don’t necessarily have to take the 52 weeks you’re entitled to, you must take at least two weeks off work immediately after the birth of your baby.

How to use it

To claim SML, inform your employer at least 15 weeks before your due date and tell them when you would like to start maternity leave. They must then write to you within 28 days confirming your start and end dates.

While you’re on maternity leave, you’re still entitled to standard employee rights that come with your job, such as holidays and promotion opportunities.

Statutory Maternity Pay ( SMP )

Employers are required to provide Statutory Maternity Pay to pregnant workers that meet the eligibility criteria. You’ll get this benefit if you have been working continuously for a company for at least 26 weeks, up until the 15th week before the expected week of childbirth. You must also earn on average of at least £118 a week as an employee.

What you get

During the first six weeks of SMP, you are entitled to 90% of your average weekly earnings before tax. In the next 33 weeks, you will get £145.18 per week or 90% of your average weekly earnings (whichever is less). Finally, you will not receive any pay for the next 13 weeks of your maternity leave.

How to use it

To claim SMP, inform your employer that you want to stop working to have a baby, as well as when you would like your payments to start, with at least 28 days’ notice. They must then inform you within 28 days how much SMP you’ll get and when it will start and stop.

Tip: Some jobs offer contractual maternity pay as a benefit. What you receive will depend on your employer, but this will always be more than SMP which is a minimum. Check your contract or company maternity policy, or ask your employer, before you create your budget.

After 39 weeks, your employer doesn’t have to pay you anything, meaning you’ll have to find other ways to manage your financial obligations during this time.

Maternity Allowance ( MA )

If you do not qualify for Statutory Maternity Pay, you may be entitled to Maternity Allowance. Those who have recently stopped working to have a baby or those who do not earn enough may qualify for this benefit, as well as some women who are self-employed.

This is paid by Jobcentre Plus for up to 39 weeks and the amount you can get depends on your eligibility. If you are self-employed, Maternity Allowance can be a valuable boost to your income while you take time off to have a baby.

What you get

Maternity Allowance is paid every 2 or 4 weeks and payments can start 11 weeks before your baby is due. Depending on your situation, you could get one of the following:

  • £148.68 a week or 90% of your average weekly earnings (whichever is less) for 39 weeks
  • £27 a week for 39 weeks
  • £27 a week for 14 weeks

How to use it

You can claim Maternity Allowance once you’ve been pregnant for 26 weeks. However, you will need to prove that you meet the eligibility criteria by providing the right information. Once the government has made a decision on your claim, they will confirm your entitlement. Funds will typically be paid straight into your bank account on your specified date of the leave.

If you are self-employed, Maternity Allowance can be a valuable boost to your income while you take time off to have a baby.

Shared parental leave & pay ( SPL & ShPP )

Shared Parental Leave (SPL) and Shared Parental Pay (ShPP) could give you more flexibility in how you share the care of your child in the first year, following birth or adoption. Essentially, an employed mother still has the right to 52 weeks of maternity leave, but it is up to her whether she wishes to swap that for SPL taken by her, and/or a partner.

What you get

Parents who qualify will be able to share up to 50 weeks’ parental leave and 37 weeks’ pay with their partner. You can choose to take this in blocks separated by periods of work, or all at once, as well as take the time off separately or together.

ShPP is paid at the rate of £148.68 a week or 90% of your average weekly earnings, whichever is lower. This is the same as Statutory Maternity Pay (SMP).

How to use it

If you wish to take Shared Parental Leave, you must notify your employer at least eight weeks before the start of any Shared Parental Leave. You can amend the dates later if you wish, but you’ll need to give prior notice of any changes at least eight weeks before the start of any leave.

Employed mothers can choose to swap their maternity leave with Shared Parental Leave, giving them the opportunity to share leave and pay with their partners, either taking time off separately or together.

What else am I entitled to?

Paternity Leave

You or your partner might be eligible for one or two weeks Paternity Leave and Paternity Pay while you are having a baby or adopting a child. This must be taken all in one go and cannot start before the birth. It must also end within 56 days of the birth.

Paid at a weekly rate of £148.68 or 90% of your average weekly earnings (whichever is lower), Paternity Pay could be a great way for partners to offer support during things like antenatal appointments. These funds will be paid in the same way as your wages with Tax and National Insurance deducted.

Paid time off for antenatal care

Employers are required to give their pregnant employees time off for antenatal care while still paying their normal rate. This is in addition to your annual leave and covers activities such as medical appointments, doctor-recommended appointments that are non-medical (parenting classes) and midwife appointments. The father of the child is also entitled to unpaid time off work to accompany their partner to these activities.

Sure start maternity grant

You may be eligible for a one-off £500 payment to help towards the cost of having a child. This must be claimed within 11 weeks of the baby’s due date or 6 months after the baby’s birth. Also, you or your partner must already receive certain benefits such as Pension Credit, Income Support, Universal Credit, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Child Tax Credit or Working Tax Credit.

Child benefits

You can get Child Benefit if you’re responsible for one or more children under the age of 16. This is distributed in regular payments of money from the government and is designed to help with the cost of raising a child. For an only child or eldest children, the weekly rate is £20.70. For additional children, the rate is £13.70 per week. Only one person in the family can claim Child Benefit but there is no maximum number of children this applies to and you can claim for every child you’re responsible for.

Give yourself some financial breathing space

Achieving financial breathing space, even if only temporarily, can be a huge help when raising young children. While there are a number of ways to do this, the goal is to restructure or repurpose your finances so that you can worry less about this aspect of your life in the short-term.

Obviously, different methods will suit different people, and postponing obligations doesn't mean they go away. But if one of the following methods can help you keep your head above water while the tide is high, then it may be worth considering.

Mortgage holidays

A mortgage payment holiday is an agreement with your bank that allows you to temporarily reduce or stop your monthly repayments. This might not be possible depending on your mortgage deal or lender policy, but it could offer up to six months of an amended structure that reduces your mortgage repayment commitments.

This arrangement sometimes requires you to overpay on your mortgage in advance to build up a credit on your account – so looking into this aspect sooner rather than later would be useful, if you are interested. Your lender might also be happy to offer you a suspended or reduced mortgage repayment period without advance payments, if you inform them of your situation.

Tip: Remember, although you are not making your regular payments, you will still be accumulating interest on your total outstanding balance. So, while it might relieve some pressure for a while, you will be faced with a greater outstanding debt after the holiday period.


Many families choose to remortgage to achieve a better deal with potentially lower monthly repayments and free up more capital from the property. If you’re having a child, this could help you raise money to cover the essential costs of raising your child, including home improvements or childcare.

When applying for a remortgage deal, many lenders will typically evaluate your application based on your maternity leave income, rather than your normal salary - which may reduce the amount you can borrow and the quality of deals available to you. Others will assess you based on your normal salary with the assumption you will be back at work eventually, while other lenders simply won’t lend to borrowers who are currently on maternity leave.

Tip: If you are not yet pregnant and are planning to have a child, it might be worth remortgaging your property in advance of your pregnancy so you can secure a better deal. However, make sure what you borrow can still be supported whilst you are on a reduced income.


Borrowing during your pregnancy or at an early stage in your child’s life can be risky. More than ever, it’s vital to make sure that you have enough room in your budget each month to cover any potential repayments as well as your general expenses.

Although immediate financial concerns might influence your decision, it’s important to remember that costs will continue to mount up as your child grows and building up any significant debt while your children are young should be avoided if possible.

Having said this, borrowing might be necessary to cope with short-term expenses and financial obligations that come with having a baby, including covering the period where maternity or shared leave affect your income. If this is only a temporary situation, or you know that increased salary or a change in circumstances will balance things out eventually, then borrowing could be worth it.

Tip: Can you wait until your maternity leave comes to an end, and you are back at work, before making the decision to borrow? If you can, lenders might be more willing to lend to you with better deals.
What will lenders want to know?

Lenders can’t ask you whether you’re expecting a child, but they can ask whether your income and expenditure are likely to change in the near future. If you or your partner will be taking maternity leave, or quitting your jobs, the answer to this will be yes. Apart from this, typical lending and eligibility criteria will apply to any applications, as well as your relationship with the lender and your credit history.

Can I work while on maternity leave?

The rules regarding work during a maternity pay period differ depending on the type of maternity pay you receive. You can agree with your employer to take up to 10 days paid work during your maternity, without this affecting your SMP. These are known as ‘keeping in touch days’ (KIT days), and can include training or any other activity undertaken to assist the employee in keeping in touch with the workplace. Even if you only work for a few hours on one of your maternity leave days, this will count as a full KIT day.

As for self-employed work while you are on SMP, this is technically allowed. So you can still generate revenue while performing freelance projects, consulting or perhaps setting up your own business in your spare time (a popular pursuit for women on maternity leave). You could even babysit for other mothers as an additional way to save money if you’re comfortable with the extra responsibility.

However, if you are already self-employed and you receive SMA, any work you do that is self- employed during your maternity leave will count as a KIT day, with 10 being the maximum you're allowed to take. For those who run their own businesses, there’s no need to shut down operations. You can still draw income from your company – you're just not allowed to do the work yourself.

Employees can work up to 10 days during their maternity, adoption or additional paternity leave. These days are called ‘keeping in touch days’.

Final tips

Sometimes, it’s simply those special tips and tricks handed down from other parents that will help you save the most during your pregnancy and beyond. We’ll leave you with some of our favourites:

  • Online bargain hunting - make use of online platforms like Gumtree and eBay that allow users to buy and sell second-hand items.
  • Old school bargain hunting - car boot sales and local charity shops are still a great way to find deals on pre-loved items, such as high-chairs or baby seats.
  • Build a network - sharing knowledge and support with other parents can come in handy in more ways than one.
  • Embrace hand me downs - let family and friends know you’re interested in certain objects or items and see what’s on offer – you could be pleasantly surprised.
  • Make the most of freebies - you or your baby may be entitled to a number of freebies or discounts, such as dental treatment, subscriptions or even deals from certain restaurants.
  • Use your KIT days - even if you’re only remotely attending a team briefing, you’ll get paid a full-day rate for a KIT day.
  • Make money on old items - whether it’s baby items you’re cycling through at a rapid rate, or your old clothes and furniture, consider selling these to raise some extra cash.
  • Get the best deals - whether it’s your utility bills or your supermarket loyalty cards, you can save a considerable sum if you check to make sure you’re always getting the best deal possible.
  • Stay on good terms with your boss - don’t miss out on company progress opportunities just because you're not at the office.
John Ellmore
Director, NerdWallet
Date published: 8th July 2019
John Ellmore is a Director at NerdWallet and spokesperson for consumer finance issues. With 16 years experience, John is committed to providing clear, accurate and transparent financial information.