Affording mat leave

[BinnyWeasley]

Hi all,

First time poster in a bit of a dilemma. Baby due early March. I am the higher earner - usual take home pay is just over £3k, husband is self employed and income is generally around the same but has the lovely annual tax bill to sort. My mat leave package is pants - 6 weeks 90% pay and then onto SMP. We currently pay 50/50 into a joint account for bills - £1200 a month, which covers everything with the exception of food (I do a lot of batch cooking/slow cooker meals that last for a few days to keep the food bill down while still eating relatively healthily!). From what I understand, SMP is going to be £750ish a month, so I need to top up roughly £450 just to cover my share of the bills. Husband is obv aware that he is going to have to pick up a lot of the financial slack, although he works outdoors and there are only so many hours of daylight! We have approx £7k in savings and I'm really concerned that I'm going to end up going back to work after all of about 5 minutes. Is there any way we can make this work? Is a 0 interest credit card an option to give a buffer? I don't really know what I'm asking here, just p**ping my pants at the thought of having to think about going back to work as soon as baby is here. I think this whole pregnancy is probably the most stressed I've felt in my entire life.

What are your finances like in a usual month? If your take home is just over £6k and you put £2400 into the joint account to cover bills between you, where is the other £3600 going? Unless there’s some other big things to pay that aren’t covered by the joint account you should have enough between you to cover everything. You’ll have £3750 with bills at £2400, which leaves £1350 for anything else which is plenty and more than a lot of people have after bills each month.

Not to alarm anyone, but isn't SMP 90% for the first 6 weeks and then £184 a week (minus NI and tax) for 33 weeks? (Unless you earn less that £184 a week and then it's 90% of that.)

Very happy to be told I'm wrong as currently dreading losing so much a month! Quietly furious we have to pay tax and NI on a benefit...

The way I read it, her husbands £3k is pre-tax?

OP are any of the £7k savings you have now earmarked for tax?

I think you'll just need to cut your cloth as it were. You'll probably scrape by but don't forget when you go back to work presumably you'll have a giant childcare bill so I wouldn't be too quick to put anything on a credit card.

You can apply for universal credit while on maternity

Tbh I don't know where extra the money goes, I have 2 horses that cost me about £300 a month - I haven't included them in my calculation as husband has said he can cover them (the other option was having them PTS as they are both older, but I couldn't deal with thinking about that too). It's been a rough few months with unforeseen expenses too.

Thanks for putting it into perspective! I hadn't actually considered looking at it from an 'over all' point of view, on paper we definitely should be able to make it work.

I think that's what OP is saying? That works out at around £750 a month.

Yes that’s right. 39 weeks total, 6 at 90% then 33 at the £184 (unless earn less).

I’m currently on maternity in the unpaid part but for the 33 weeks if all you earn is the SMP you don’t end up paying any tax on it as it is below the threshold, and you actually tend to get tax back from previous months.

Yep, he's £3k pre tax, just done tax return and is actually in credit so nothing owed for this year. None of the £7k is earmarked for tax now (was before tax return).

Will bin the CC idea for now. We have retired parents close by so I think we will be leaning on them heavily for childcare outside of the allowance. They don't know this yet, but I'm sure they will be overjoyed!

I think the only things we pay for individually bills-wise are vehicle insurance (and business insurance for him), my ponies (about £300 a month) and the food shop.

I saved as much as possible during pregnancy to top up SMP. It's a good way to adjust to living off less in prep for mat leave

🤦🏼‍♀️misread it as £750 a week. Ignore me!

How long do you want to be off for? You still get annual leave entitlement, so last month can be the annual leave, so full pay.

Save as much as you can out of the next three pay packets, if you need to dip into savings towards end of Mat leave then do and pay it back in monthly

Remember you can also do some Keeping In Touch days at full pay which could earn you a little bit extra, and it can also help ease you in to going to work.

I'm aiming for 9 months but accepting of it possibly being only 6. Open to selling pictures of my feet for £ at this point.

Good points about annual leave and KIT days.

It sounds like you'll be able to manage on your OH's wage.

I'd recommend doing a simple budget and listing your income and all of your outgoings and seeing if there are any areas you can cut back.

I appreciate you have the tax bill to pay - just include a rough amount in your monthly budget. You'll also get child benefit.

Honestly you will probably be fine for the 9 months with your incomes. You do need to approach it as joint income and discuss this together. Pool your money, work out how much you’ll have between you and how much you need to cover all bills, food and expenses and then split what is leftover between you so you both have a bit of spending money. It would probably be good to go through your accounts and work out where your money is going now, then you can work out where you can cut back and what’s not necessary spending. You should be entitled to child benefit too which is around £95 every 4 weeks.

Thank you all so much - reassuring to hear, think I've gotten myself so worked up about it, I was in disaster mode.

We're going to draw up a spreadsheet this weekend to look at joint account stuff and then our individual outgoings.

Glad I joined MN, very helpful and lovely people here 😊

Second people saying save as much as possible before you go on maternity leave.

Worth also thinking about the horses. Could you considering loaning them while on Mat Leave, if you're not likely to be riding? Are there any cost savings you can make by changing the arrangements you have with them?

I'm a bit stuck with the horses unfortunately - they're older Thoroughbreds that haven't been ridden in years (one slightly mad, the other slightly crippled). They're currently on grazing livery only and my only other bills are copious amounts of hay and feed in winter and a quick trim, I cancelled insurance (other than my Liability with BHS). I'd pretty much made the decision to have the slightly crippled one PTS as he usually goes downhill in winter, but this year he's looking better than ever. He's usually really struggling with arthritis by now, dropping weight and suffering from consecutive abscesses, but he's doing absolutely fine. A tough call to make when the PTS decision is almost entirely financially based at this stage. If I did have just one, the £300 a month would more than halve.

Just to add to the other advice already given - I found I didn't spend much in the early days of mat leave as trips out were a walk with the pram or meeting NCT mums for a coffee once or twice a week. I didn't spend money on dinners, shopping, other entertainment etc so you won't need much money yourself initially.

Do you have any paid benefits eg car allowance as these don't stop over mat leave?

If you can manage it, do take the leave you have planned as you won't get the opportunity again.

You need to stop thinking about it in terms of how you are going to make up your half of bills. I’m all in favour of separate finances (even in a marriage!) but when you are off work to look after your joint child you need to pool money for that period.

Six months is still a good amount of time to have if that’s all you can afford.

Yes I do get a car allowance that comes as part of my pay - I hadn't even considered this! I assume it remains the same amount (after tax) each month? That would be a huge help as it's about £400 a month. So it'd be the £750ish from SMP, plus the £300ish (after tax) from the car allowance?

Can you look at some additional sources of income like selling things on vinted or taking a lodger for couple of months to boost your savings.
As well as buying things second hand from marketplace for baby will save you 100s.

@BinnyWeasley yes the gross amount won't change however with the timing of your mat leave you won't pay much or any tax because apr is the start of a new tax year and tax deductions are based on your expected earnings if that makes sense. You may only have a couple of weeks of full pay in the new tax year?

Even if they tax you on your normal tax code the first couple of months while everything catches up you'll get a tax rebate a few months later if you've overpaid. If you take 9 months off work next tax year you won't be a high rate tax payer so bear that in mind with your calculations.

I'm not a tax expert but hopefully that makes sense. I was pleasantly surprised when I saw my car allowance alongside SMP!

First things first.

You both need to sit down and work out where your money is going.

There's a big gap between earnings and identified spending. You’ll need a handle on that to adjust budget.

Next thing - don’t spend money on baby stuff. New car seat and mattress. That’s it. Everything else can get bargain basement secondhand prices on. It’s easier not to spend that earn extra.