Financial help for maternity leave

[AK1980]

Hi. New joiner to Mumsnet here.

When my second child was born, my wife and I had a conversation that might sound similar to some of you. We were trying to figure how we could afford for my wife to take the full 12 months of her maternity leave entitlement. The issue is that she only qualifies for statutory maternity pay, which is not enough to cover our living costs for an entire year (even with my salary). With our first child, we fortunately had enough savings for my wife to take the entire year (and with the help of significant belt-tightening). Definitely not the case this time around, so we figured that she could only take about 6 months.

Just wondering, how other families manage their parental leave when savings isn't enough, government benefits are not sufficient and the budget can't be stretched further? Also, I am wondering if an affordable loan/credit card product could help parents cover their costs while on leave so that they can take their full entitlement.

Full disclosure: our situation motivated me to start developing an idea for a socially-responsible enterprise that would provide flexible and affordable financing for new parents to help them cover living costs while on maternity/paternity leave.

To be clear, there is no actual business at the moment..I am just interested to hear from people. In general, I see greed as the main problem with the finance sector, but there has to be some financing solution out there, no? Am I missing something? Anyways, thanks for hearing me out.

We couldn't afford for me to take a year off or even 6 months with my first 2 babies. I went back to work part time when they were 5 and 4 months respectively. I guess people either save hard to fund a full year or they ask for a mortgage holiday or they just cut back on expenses or like you say put it on a credit card and gradually pay back once they are back at work.
For people on a lower income they can possibly claim tax creidts whilst on mat leave, £100 a week from smp can be discounted for tax credit figures.

I think most people take as much time as they can afford and then go back to work, tbh. I certainly wouldn't encourage anyone to get themselves into debt to fund a longer maternity leave, even if it was a "flexible and affordable" loan.

I think people would be better advised to space out their children and save as much as they can before getting pregnant.

I found SMP and tax credits quite sufficient. Our fixed costs are very low though.
SMP runs out after 9 months so I returned when that ran out.

Is your wife the lower earner or are you? My partner earns less than me so I took 4 months off then returned to work when my full pay ran out, putting dp on APL.

What Broken said. I only took 4 months with our second. Certainly would not have got into debt or expect the government to fund me to stay home on a year-long maternity leave. I'm rather shocked you hadn't planned all this before the baby was born.

I hear everyone on the importance of planning, and failing that just to return to work earlier. I guess I was looking at it like mortgages or auto financing. There is something of value that you want now (e.g. a house, a new car, a year with your baby) but whilst you cant afford to cover the entire cost now, you could afford it over time. Sure you could continue to rent/buy a cheaper car/return to work earlier than you wanted, but I was thinking if there could be a financial solution to the problem. By the way, I completely agree with not encouraging people to take on debt if they cannot afford it.

'By the way, I completely agree with not encouraging people to take on debt if they cannot afford it.'

But that's exactly what you're suggesting . You can sell a car or a house, you can't sell time you took off. You need to put up collateral to borrow money and have a reason for doing it, so this is taking on debt and putting your assets in jeopardy rather than taking some responsibility for yourself and planning and saving as appropriate.

Personally I feel that there's an over emphasis on the first 12 months of a baby's life.
I went back to work earlier (self employed) specifically in order to not use all my savings and keep some for unpaid time off in the other preschool years.

I think debt is a bad idea. Children only get more expensive as they grow, so if you are struggling when they are babies AND take in debt, you could end up in real trouble later. The answer is boringly to save in advance and don't have more Childers than you can afford.

I kind of see your reasoning but I can't see what would be different to an ordinary loan?

We could afford 10 months with my first so that's how long I took off. There wasn't a question of taking longer but it was part time. I cried my eyes out at the thought. Second time round I thought I d take 12 months and we could afford for me to do so but with two under 2.5 years I was desperate to go back after 10 months so did so!

It's totally different from a mortgage, a) because people usually have to pay for housing anyway, and b) because you have a house to sell at the end of it.

I think it's a bad idea, sorry. Being off for a long period with a baby is a luxury, not a necessity, and if you can't afford it, it would be stupid to get into debt for it.

It's just a loan, surely?

Bizarrely enough, I had a think about how much I would need to stay off for my preferred time, and you know - saved up until I could afford it.

I had loads more than I needed as it happened, but that came in useful when 4 years later it went on IVF

People do a variety of things. They might return to work early. They may postpone having another child until they have saved up more money. They could have a mortgage holiday which I think is a far better idea than a loan. It's just a non starter I'm afraid.

I'm single and will have to start working part time (only 8 hours per week) from when my baby is 4 months old to keep my self-employed business running. From when baby is 8 months old I'll be working 2 days per week plus some work in the evenings.

I'd love to have a full 9 months' maternity leave without having to work at all but it's just not possible for everyone.

I will use a 0% credit card if I have to but I've set it with a £1000 limit to prevent the amount I owe getting too out of hand.

Single mum here, so SMP wouldn't have scratched the surface, let alone covered all the costs of a first baby - car seat, pram, etc. I took out a loan before finishing work. It covered big purchases and made my 6 month mat leave doable, and it's only now I'm back at slightly reduced hours that money is getting tight. I will be in debt for at least a good 3-5 years now, longer if I need to borrow more. It's not comfortable right now, but baby is worth these few frugal years.

When my first child was born SMPnwas less generous than it is now and you could k let take a maximum of 9 months off, 3
Months of which was unpaid. I had to go back to work when baby was 5 months old and I still needed to take a mortgage payment holiday of 2 months to make it doable.
The problem is that childcare costs are now so high that many people are not better off by returning to work earlier. Having a child is all about careful budgeting and planning now that childcare costs are so extortionate.

Blue - are you aware that you can claim child tax credit? The online calculators make it look hopeless as they calculate based on previous tax year when my salary was good, but I've spoken to them and they say once I've finished working they'll do a claim based only on what I'll earn during tax year 17-18.

When my ds was born we just managed. I went back to work after 12 weeks as simple only offered that. Taking 'debt' shouldn't be an option. We had one child as it was what was/is affordable.

With DD1 I was a single parent, took a new job while pregnant as was a good long term prospect and saved like mad, cut down on all excess spending, only bought long term necessities - managed to save enough that whole off I had as much free spend as when I was working, back to work when DD was just under 6 months, with DS we survived on savings and DH wage and tax credits - DD2 I had a good mat package which meant that I could take the full year, 6 months paid / 3 months statuary / 3 months nothing

But again we used savings.

I am not loan adverse and have taken them to fund big purchases (car/house) but prefer to trim spend to match income rather than expect to live at an unaffordable level long term

A better socially responsible enterprise would be providing budget planning, short, medium and long term, maybe with emergency low cost loans but the focus should be living within your means and learning (as needed) to differentiate between essential and luxury

We were able to take a mortgage holiday both times.

I would not finance maternity leave with a loan, I'd much rather return to work earlier.

I agree with the majority. It would no in any way be a socially responsible enterprise to encourage those who are struggling to stay off work for longer and fund this with debt. All you are doing is suggesting a loan. How is that socially responsible? You're simply saying "my loan would be better than the bank's loan - come to me for your borrowing".

I took nine months with each of mine and then went back. We could afford that because we'd saved but we couldn't have afforded for me to be off for longer. Solution - easy - go back to work.

INeedNewShoes I looked into CTCs a number of times but could never work out how to get it to actually give me any money. Can I back claim for last year if I applied now?

The problem I've always had is that I have a fairly good salary (£37k pre mat leave and £31k now) but I have a high mortgage because I live in a stupidly expensive area, plus was paying off a car loan until last year, and am paying off student loan until later this year. All the calculators take one look at my income and discount my outgoings.

In an ideal world I would have saved up before I got pregnant and wouldn't have taken a loan out, but I didn't want to leave it until my mid-late 30s to start trying. It's not something I would recommend people do, but given that I only stayed off work for 6 months, and knew I would be going back to 4 days a week rather than more drastically reduced hours, I wanted to find a way to make it work as otherwise I would have been back to work after 12 weeks because I wouldn't have been able to pay the mortgage. I did ask for a mortgage holiday but the bank (Barclays) flat out refused.

You are unlikely to get any child tax credits on a salary of £31k ( assuming you have a partner who earns as well ) unless you have loads of kids or high childcare costs.

I wouldn't welcome a culture which puts so much emphasis on the first year that people are encouraged to get into debt in order to fund twelve months of parental leave.

I'd prefer to see a culture of better part time/flexible working opportunities for everyone, on a long-term basis.