Survive the salary drop on maternity leave
This is one of my most popular posts on Mrs Mummypenny, how to survive on maternity pay. It was written back in 2013 when I was on maternity leave. Now it is read maybe 500 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 Instagram for many personal finance and money saving tips.
Over to my post written in 2013. (I have corrected bad writing from my early days of blogging!)
Jack is nine months old today (July 2013) and the time has come to return to work. I am going back to work three months early than I could have done, but alas money has become tight and I cannot survive on the lower maternity income any longer. I feel very grateful that I have had ten months maternity leave with baby number three, but am happy and looking forward to returning to work.
Here are my tips on how to survive on maternity pay.
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. So how do you survive on maternity pay?
The statutory maternity pay is £151.20 per week or 90% of your average weekly earnings (whichever is less) (correct in 2020/21 tax year) & 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, like childcare vouchers and 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, a huge benefit for your future self.
Here are my top tips to maximise your salary/earnings whilst on maternity leave. These apply to your actual salary and place of work.
Use as Little Paid Holiday as Possible
Whilst pregnant and still at work, try to take as little holiday as possible. Then you will have a few weeks stored up when you want to start maternity leave. You can take your holiday first, get paid full pay, then start your maternity leave after that has run out. Your maternity leave must start by the day your baby is born.
I had 4 weeks holiday remaining before Jack 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 as opposed to tax and NI. For example I dropped from a higher tax rate salary to a lower rate so my % of income paid to tax dropped.
Childcare vouchers are 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 them up for use later in time, like when you are back at work and need more childcare. There are 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 (in my experience)! 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 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 your income will be and your expenses. Don’t forget to include one-offs like holidays, Christmas, birthdays. If you need a great excel budget template you can download one here.
How to Survive on Maternity Pay – 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 eBay during my maternity leave. This was key to helping me survive the salary drop on 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, go to Topcashback, Search for the retailer, click through and buy as normal. Your Topcashback account will be credited with the relevant cash back.
Since Nov 2012 I have earned £3500 in cash back!! I use it for annual renewable bills such as insurance, switching gas/electricity providers, new credit cards, 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
When you’re trying to survive on maternity pay, it’s important to make money where you can. So get rid of your old cd’s and dvd’s, books and games. 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. I received £77 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 Jack 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. Along with endless baby trial products, changing bags, nappies and wipes from the baby clubs.
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 decide to switch, we both get a £50 credit to our bill. Win -Win!
So add all that up..through my clever money saving I have made or saved a total of £2,700. I would love to hear how you managed to survive on maternity leave.
This post contains affiliate links where I get a small fee for referring you to company I mention. Thank you if you sign up. This helps me to run Mrs Mummypenny and keep pumping out the FREE content.