Maternity Money Diaries – Month 1
It’s a new year – happy 2023! We’ve just come out the most expensive time of year over the Christmas period and it happened to coincide with receiving my first maternity pay cheque – yikes!
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). So although December was a docked pay, I am grateful it was only reduced by 10%. That I can manage. Nevertheless, it was vital to budget this month strategically. This consisted of:
1. Putting 20% of my income towards emergency fund – we had some unexpected things pop in recent months that meant tapping into some of our cash reserves. So preparing for the year ahead of reduced pay, it was important to top it back up for any things that may crop up during maternity leave.
2. Increased energy costs – we had a very cold spell in December which meant a much higher gas bill than usual. To be transparent, our December utility bill was £172 more than our November bill. This needed to be factored into the budget too.
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.
In December, we made all of our regular Monzo pot payments (birthdays, car insurance, house insurance, MOT & car service, baby fund, etc.) and done one final big top-up into our Christmas fund to enjoy over the season.
4. Mortgage overpayment – For the past 6 months, we’ve been overpaying our mortgage a little every month. This will mean that when my salary drops to zero near the end of my maternity leave, we will have the option to pay less towards the mortgage. It’s basically a paying it forward technique. However, our hope is to not use this and keep it as an overpayment, but at the same time you never know what life will throw at you (especially as my husband is self-employed) so it’s best to be prepared ‘just in case’. 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 there were bound to be things that we would need to buy or that we had forgotten so we put £100 aside for this. We’ve already tapped into this money to buy little things, so I am glad this was budgeted for.
6. Investing – I am still contributing to my employer pension whilst on maternity leave so that is still ticking over, but in terms of investing into our ISAs, this will be drastically reduced/on hold this year. This makes me kind of sad as there’s nothing more satisfying than seeing your investment portfolio grow. But one of the beauties and hard realities of life means priorities have to change with seasons, and right now the priority is getting as much time as possible (the full 52 weeks) at home with my baby. So if it means investing less or nothing at all during this time, then so be it. This month we were able to contribute a small amount into our ISA, but this will not necessarily be the case for the months to come. I’ll keep you posted!
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30-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!