This is one of my most popular posts on Mrs Mummypenny, how to survive the salary drop on maternity leave. It was written back in 2013 when I was on maternity leave. Now it is read hundreds of times every day! You probably found me via google. If so hello, welcome to Mrs Mummypenny. Please do sign up to my newsletter and follow me on social media for tons of personal finance and money saving tips.
Over to me in 2013 just about to return to work after maternity leave
Little J is 9 months old today and the time has come to return to work. I am going back three months earlier than I could have done, but alas money has become tight and the family cannot survive on my lower income any longer. I feel very lucky that I have had ten months maternity leave with baby number three, but am excited about returning to work.
Here are my tips on how to survive the salary drop whilst on maternity.
Most of us when we go on employed maternity leave get the first six weeks either full pay or 90% of full pay (statutory minimum). After then it often drops and becomes a lot harder to manage.
The statutory maternity pay is £151.97 per week or 90% of your average weekly earnings (whichever is less) (correct in tax year 2021/22) & you are paid this for the first 39 weeks of your maternity leave.
If you have benefits taken as cash, like car allowance, these continue to be paid whilst on maternity leave. Also deductions from salary continue such as pension. You can stop these if you chose to, but I would highly recommend if you can afford it to not stop your pension contributions to protect your financial future.
Here are my top tips to maximise your salary/earnings whilst on maternity leave.
Use as Little Paid Holiday as Possible
Whilst pregnant and still at work, try to take as little holiday as possible. You will then have a few weeks stored up when you want to start maternity leave. Take your holiday first, get paid full pay, then start your maternity leave after that has run out. You maternity leave must start by the day your baby is born.
I had 4 weeks holiday remaining before J was born. Maternity leave started on the day he was born. This is the latest day it can start.
Your tax paid as a % of your income will drop when your maternity pay drops, meaning you should be paid a higher proportion of your salary as cash rather than it being paid as tax. For example I dropped from a higher tax banding salary to a lower rate banding so my % of income paid to tax dropped.
Tax Free Childcare
Tax Free Childcare is a tax efficient way of paying for childcare that may be carried on during maternity leave and may be needed after maternity leave. You can save up the payments for use later in time, like when you are back at work. There were big changes to childcare vouchers in 2017. I wrote about it in this blog post when I met up with the government department introducing the scheme and was interviewed on Share Radio.
Use your 10 KIT (keeping in touch) days. You will get paid full day rate salary for these too so stay in touch by attending team meetings etc and you will get paid for the full day, sometimes even if it’s just a 3-hour meeting! I am currently working 1 day per week in the lead up to returning to work to ‘ease me back in’ this will mean I get paid for my full allowance of 10 KIT days. Great at the moment as I really need the money!
Ensure you claim for any work related expenses whilst away on maternity leave, so travel to any offsite team meetings, subscriptions etc.
Write a budget and stick to it. Work out how long you’re going to take off, and how much income will be and your expenses. Don’t forget to include one-offs like holidays, Christmas, birthdays. If you need an excel budget example you can download one here.
Think about Saving for Your Childrens Future
Just £10 a month paid into a Junior ISA for your baby is going to turn into a significant amount of money when they turn 18. A Junior ISA is a great place to put money aside. My choice was to open a Stocks & Shares Junior ISA with Beanstalk. The money is then invested in funds over a long period of time. Stocks and shares can of course go up and down in value, but with interest rates so low I am happy to accept the risk and invest my childrens money in the markets. You can read more about Junior ISA’s with Beanstalk here.
Top Tips for Other Earnings
Sell Sell Sell
Go mad on eBay or local selling sites (you’ll find them on Facebook).
Anything you haven’t used for a year you are unlikely to use again so sell it! eBay works well for designer clothes, new things in good condition, games, electrical items. Remember the 10% eBay commission and the PayPal fees. The great thing about local selling sites on Facebook is that there are no fees, but a smaller selling audience and you’re not going to get the exciting bidding frenzy. I made £1,000 on eBay during my maternity leave.
Try cash back sites. This really is free money, it’s not too good to be true. My favourite is Top Cash Back but there are others too. For any online purchase, register an account on this website. Search for the retailer and buy as normal. Your Topcashback account will be credited with the relevant cash back.
Since Nov 2012 I have earned more than £1000 cash back!! Note to update this post, in the 9 years since Nov 2012 I have earned £5000 in cash back. I also use it for annual renewable bills such as insurance, switching gas/electricity providers, new mobile phone, broadband, paid for TV. It is really great. The cash takes a few weeks to be verified but then you pay it straight into your bank account.
Or you can move money into a reward wallet and convert it into gift vouchers. You will get an extra bonus for doing this. I recently converted some cash back into Halfords vouchers preparing for the boys birthday pressies and got a 5% bonus on top of my cash back reward.
Make Money on Old Items
Get rid of your old cd’s and dvd’s, books and electrical items. Use the Music Magpie website and app on phone to scan everything in. You pack them all into boxes and a courier comes to your house to collect. £77 I received from selling 150 cd’s and dvd’s and the money was paid straight to my bank account
Why not consider writing reviews and complete questionnaires and you’ll be rewarded with amazon vouchers or sometimes even cash! I have done some reviews for channel 4 TV, an interview for a money saving website, an interview for the Telegraph. I have got a set of 20 professional photographs from the telegraph with baby 3 and I for free. You would normally pay at least £500 for these style photographs and the photographer normally takes famous people photos too so they’re pretty good! I have earned about £100 worth of amazon vouchers and £100 worth of Tesco Clubcard vouchers.
I have this post written by a friend who tried out some questionnaire sites to see if its really worth the time, and what rewards she got.
Loyalty Card Points
Fully utilise Tesco Clubcard vouchers, nectar points, boots advantage points. Join all the baby/loyalty schemes. You will get plenty of freebies. During my maternity leave I got the following for free using my Tesco Clubcard vouchers – Eurotunnel ticket worth £150 / Legoland entry for 2 families (4 adults and 5 children) worth around £150 / replacing £100 worth of Denby dinner wear/ new Denby cutlery worth £100 / £300 towards diamond necklace at Goldsmiths. Total saving £800
Check Your Bills
Check you’re getting the best and cheapest rate for everything. TV, credit card, utilities, mobile phone, broadband, insurance, bank account, saving accounts. All companies offer deals to keep you as a customer, but I can pretty much guarantee that you will get a better offer switching to a new company as a new customer.
Grab Yourself a £50 credit towards your bill if you switch
Get a quote from Octopus to see if you can save compared to your current energy company. If you will save and decide to switch, we both get a £50 credit to our bill.
So add all that up..through my clever money saving I have made or saved a total of £2,700. I’d love to hear how you managed to survive the salary drop whilst on maternity leave.
This post includes affiliate links where I and you will get a bonus when you sign up. if you do, a huge thank you!