1. Plan, budget, then plan again
How much you need to plan for depends on your employment and your personal choices, but also, circumstances beyond your control. The more you plan ahead, the better. Err on the side of caution and add an extra 10% to the amount you have budgeted to cover costs.
There are all the initial costs of buggies, car seats, clothes, nursery decorations and endless nappies. Then, there are activities to do with your baby, which could set you back around £10 a week. However there are free local council and other community-run sessions in most areas if you do not wish to pay.
2. Don’t be in the dark over your pay
How much your income will be affected can be calculated if you are employed and your employer has clear guidelines on what maternity pay you can expect. Check your employment contract or your company’s intranet. If you still aren’t clear, contact your HR manager directly. Full pay for 12 months is rare but the odd employer still commits to this.
Those working for less enlightened employers or the self-employed may find they are entitled only to statutory parental pay: the minimum new mothers and fathers will receive. It is 90% of your full pay for six weeks and then £139.58 a week or 90% (whichever is lower) for the next 33 weeks. This means that if you took a full year off, the final 13 weeks would be unpaid. You may also receive a tax rebate if your leave reduces your income for the year by enough to change your tax code.
3. Share the load
You can share your entitlement of 52-weeks leave with your partner, allowing you both to take some time off work to care for your baby. Shared parental leave is paid at the same rate of £139.58 a week or 90% of earnings (whichever is lower) as statutory maternity pay. Whether this option appeals will depend on your baby, how much both of you earn, the nature of your jobs and what you agree is the best option for everyone.
Many women choose to take leave a few weeks before their due date. This means that you will reach the bottom of your maternity pay pot sooner.
4. Going back to work - or not
Returning to work may seem a little far off, but your plans are worth considering even before you have your baby. You may plan to go back, and then not go back, or go back part-time. Only around 60% of women are working when their children are under 3 years old. Building a little room for freedom of choice into your plans, if possible, is a good idea.
5. Check credits and benefits
You could be eligible for tax benefits and credits, such as child benefit, although how much you receive will depend on earnings. If you earn more than £50,000, you can either choose not to claim it or pay back some of it according to how much you earn, although there are certain advantages to claiming it. For more information about child benefits visit https://www.gov.uk/child-benefit/what-youll-get
6. Make the most of free things
When you are pregnant, you are entitled to free prescriptions and free dental treatment until one year after your baby is born, with a valid maternity exemption card. To apply for an exemption card request an FW8 form from your doctor, midwife or health visitor. The NHS website has some helpful FAQs about the application process.
If you plan not to work until your maternity leave ends, consider keeping a little in reserve to help cover the cost when you do eventually go back to work, as many mothers find there is not much cash left over once the childcare has been paid.
The average cost of a nursery place is £115.45 a week for 25 hours, which is about 3.5 days. This can be much higher if you live in London or the South East. So if you do find yourself in surplus cash in the run up to your baby’s birth, starting a “childcare fund” would be prudent. Consider in advance whether you would prefer a childminder or nanny instead - as these can be more costly options than nursery care. Nanny sharing can halve the cost of childcare if you can find someone else who needs the care.
What is Money Means?
Money Means is a news and information series written by independent financial and consumer journalists and experts. FSCS launched Money Means in 2016 to help give people clear and useful information about personal finance, to increase their understanding and confidence when dealing with money. .