Maternity Money Diaries – Month 1
And just like that, my year-long maternity leave is over. Not only did I survive, I actually enjoyed it! But there were many things working in my favour that helped me to enjoy it. First of all, I was very fortunate to not experience any postnatal blues/depression. Second, I have a hands-on husband who makes the whirlwind of parenthood a little bit easier. And last but by no means least, our finances (which took careful planning) allowed me to simply enjoy my maternity leave and not have to fret about how we were going to afford our life.
As you may or may not know, women are entitled to 90% of their pay during their first 6 weeks of maternity leave (read here for my blog post on maternity pay entitlements in the UK or click here for my YouTube video). But things get much more bleak after that. It does depend on your companies/organisation/workplace policies in terms of maternity pay, but many do drop down just to SMP after 6 months and down to absolutely nothing after month 9 - ouch!
Below I am sharing a few of the thing I did which hugely helped our finances during those last months when my pay was drastically reduced:
1. Top-up the emergency fund – A few months before I went on maternity leave, there were a few different things that meant we tapped into our emergency fund. But I knew we had to top that up again before my maternity leave. We more than ever needed something to fall back on just in case with just one income.
2. Increased energy costs – We had to budget in increased energy costs throughout my entire maternity leave. We slightly over-budgeted for this in the end, but it meant we weren't blindsided each time Octopus came to us to tell us they were increasing our monthly direct debit.
3. Monzo pots – If you’ve been subscribed to my YouTube channel for some time, you’ll probably know that I am a huge fan of Monzo pots (view my video here). It is one of the greatest financial tools I use to keep ahead of the game. By using Monzo pots, I save all year round to pay for things annually which sometimes works out cheaper, but also gives peace of mind that something is already paid for the year ahead. It's a good practice to get into because it makes you think forward about your finances, and not just focus on the here and now. This meant throughout my maternity leave we still had money to cover Christmas, birthdays, car insurance, house insurance, MOT & car service etc.
4. Mortgage overpayment – For the 6 months leading to my maternity leave, we overpaid our mortgage a little every month. This meant that when my salary dropped to zero, we had the option to pay less towards the mortgage. It was basically a paying it forward technique. Although we didn't end up needing to touch the overpayment, there was a sense of relief knowing it was there. Plus, it's never a bad idea to overpay your mortgage anyway, especially with what we're seeing with mortgage rates at the moment.
5. Baby stuff – Despite being very well prepared for the arrival of our baby boy, I knew throughout his young life things would continue to crop-up, and wow did they! We put into our budget £100 per month for any non-essential things for him, and it got used up every single month. However, this was definitely a choice! I bought him things he absolutely didn't need. I took him to paid (and quite expensive) baby classes when I could have just stuck with the free ones. But for me it was enjoyable to know I had extra wiggle room in the budget to do things just because.
6. Investing – Throughout my maternity, my monthly pension contributions continued. It brings me unspeakable joy to know that my pension has not suffered at all over the past year. If you can afford to, KEEP your pension contributions going. Unfortunately, investing into our Stocks and Shares ISA were hit and miss. Some months we could put a little in, but most months we couldn't. But we did make sure to invest £50/month for our son. It's definitely not much, but thankfully due to time and compound interest he should have a tidy sum tucked away for him by the time he enters adulthood. One of the beauties and hard realities of life mean that priorities have to change with seasons. And we decided that our priority for the season was that I got as much time as possible at home with our son. A decision I don't regret one bit!
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31-year old living in the UK who is actively working towards achieving Financial Independence (FI). Sharing all the tips and tricks I am learning along the way!