How to avoid getting into debt on maternity leave

John Baird from Scotland Debt Solutions gives some advice on how to get through your parental leave without falling into debt.

woman with empty purses


It is common for parents to fall into debt during maternity leave, falling behind on essential childcare costs such as healthcare, babysitting, baby equipment and all at a multiplied rate if you have more than one child to care for. The maternity leave period is instrumental in providing a dedicated period where parents can form a bond with the new-born child. In the run-up to maternity leave, many parents build a savings pot to help them through the salary drop, writes John Baird of Scotland Debt Solutions.

Shared parental leave

The option to take shared parental leave allows both parents to split who will care for the child after birth and who will remain in active employment. By allowing parents to share parental leave, you can better plan childcare to ensure that one parent is always available to supervise the child and fulfil the needs of the newborn.

The government measure enables you to split 50 weeks of leave and 37 weeks of pay in the first year of the child being born. You can take this in one block, separated periods or stagger the leave. There are different rules for if both partners want to share parental leave or if the mother wants to take parental leave and pay. A benefit of taking shared parental leave can include returning to work earlier than expected; and also offering fathers the chance to spend time developing a strong relationship with the child.

The loss of income as a result of one parent taking leave from work can mean falling behind on childcare costs. Shared parental leave allows parents to structure their income, allowing them to choose which parent should return to work to earn their full salary and which parent should take statutory leave and pay, or split the responsibility.

Internal company schemes

Many companies establish competitive maternity packages to offer extra assistance to parents on maternity or paternity leave. This includes the likes of a bonus for the birth of your child whilst you are employed by the company, additional maternity leave or a baby hamper. Selected companies in the UK offer enhanced maternity packages and incentives, such as:

– Cisco: On-site nursery at UK head office
– Vodafone: Reduced weekly schedule to 30 hours on full pay on return to work for a short period

This can help lighten the burden on new parents as initiatives such as an on-site crèche can help dramatically cut travel costs and make the transition into parenthood more manageable. If you’re a full-time employee, make sure you thoroughly look into the schemes which may be on offer from your employer to support you during your maternity leave.

Financially surviving during maternity leave

Figures released by Noddle show that one in four parents struggle with finances during maternity leave which could result in falling behind on childcare costs. The study found that 25 per cent accumulated debts of over £2,700, resulting in turning to credit or overdraft to access extra funds. If you’re a contractor or freelancer, there are less financial protections in place to cover you during maternity leave so a war chest may prove helpful. A war chest is essentially a pot of funds set aside for a rainy day, emergency or unexpected circumstance, such as time off work due to an unplanned pregnancy.

Earning money whilst on maternity leave

KIT Days: As a full-time employee, you may be eligible to 10 keeping in touch (KIT) days to allow you to keep up to date with work affairs. You can attend work for 10 days on full pay, such as for a team meeting, training day or a general catch-up. If you’re at the office even for a couple of hours, you will be paid a full day’s wage. KIT days can be taken non-consecutively so you can ensure that you receive a steady stream of income to help with childcare and living costs.

Annual Leave: Retain your annual leave to use over this period as any holiday taken will be paid at the full rate. This can help with childcare costs and supporting additional financial commitments.

Sell: If you’re a DIY mum, you may prefer to make money from old belongings by turning to eBay. If you have items you haven’t made use of in one year, it may be time to list the item and make a few pounds or even hundreds.

As a working mum, the salary drop experienced as a result of one parent taking a break from work can have an emotional and financial impact. As you’re required to fund the livelihood of a new child, this period can be expensive. Falling behind on childcare costs is an experience endured by a quarter of mums on maternity leave and small tips offering a helping hand can assist in alleviating stress and financial pressures during this sensitive time.

*John Baird is a partner at Scotland Debt Solutions, a personal debt advisory platform for Scots in Debt. Established in 1989, our team of debt specialists are highly experienced and can offer debt solutions, such as sequestration, a debt arrangement scheme and trust deed services.

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