Financial Planning for Maternity Leave: Budget & Save Effectively

The Financial Impact of Maternity Leave

Taking maternity leave will likely mean a significant reduction in your income. Understanding exactly how much you'll receive is the first step in planning.

Use our Maternity Pay Calculator to see your exact weekly breakdown, then follow this guide to plan your finances.

Step 1: Calculate Your Income

Maternity Pay

Work out exactly what you'll receive:

•Weeks 1-6: 90% of your average weekly earnings

•Weeks 7-39: £194.32 per week (or 90% of AWE if lower)

•Weeks 40-52: Unpaid

Partner's Income

Factor in your partner's earnings and any shared parental leave they might take.

Benefits

Check your eligibility for:

•Child Benefit — up to £27.05/week for first child

•Universal Credit

•Tax-Free Childcare

•Sure Start Maternity Grant (£500 for first child if on benefits)

Step 2: Audit Your Expenses

Essential Expenses

List your non-negotiable monthly costs:

•Mortgage/rent

•Council tax

•Utilities (gas, electric, water)

•Insurance

•Food and groceries

•Transport

Flexible Expenses

Identify spending you could reduce:

•Subscriptions (streaming, gym, magazines)

•Eating out and takeaways

•Clothing and shopping

•Entertainment

New Baby Costs

Budget for new expenses:

•Nappies: approximately £40-60/month

•Formula (if needed): approximately £40-80/month

•Baby essentials and clothing

•Childcare (when you return to work)

Step 3: Build a Maternity Leave Budget

Create a month-by-month budget covering your entire maternity leave:

Month 1-1.5 (Higher rate SMP) Your income will be 90% of normal — closest to your usual salary.

Months 2-9 (Standard rate SMP) This is when the financial impact hits hardest. You'll receive £194.32/week (approximately £810/month before tax).

Months 10-12 (Unpaid) If you take the full 52 weeks, the last 13 weeks are completely unpaid.

Step 4: Start Saving Early

How Much to Save

Calculate the monthly shortfall between your maternity income and expenses, then multiply by the number of months you plan to take off.

Example:

•Monthly expenses: £2,500

•Monthly maternity pay (standard rate): £797

•Monthly shortfall: £1,703

•If on standard rate for 8 months: £1,703 × 8 = £13,624 to save

Saving Strategies

•Set up a standing order to a dedicated savings account — automate this so you save without thinking about it

•Reduce unnecessary spending immediately — review your bank statements and cancel anything you don't use regularly

•Sell items you no longer need — use online marketplaces to generate extra cash from clothes, electronics, and furniture

•Start a no-spend challenge — try one or two no-spend weeks per month to boost your savings

•Redirect any bonuses or overtime pay directly into your maternity savings fund

•Consider a cash ISA — if you're saving well in advance, earn tax-free interest on your maternity fund

Use our Maternity Pay Calculator to calculate the exact income gap you need to cover, and our Take-Home Pay Calculator to see your after-tax maternity pay.

Step 5: Reduce Costs Before Baby Arrives

Start cutting costs as early as possible to stretch your savings further:

•Overpay your mortgage to build up a payment holiday buffer — speak to your lender about options. If you're worried about your mortgage during maternity leave, plan ahead.

•Switch energy providers to reduce bills

•Review insurance policies for better deals

•Cancel unused subscriptions — streaming services, gym memberships, magazine subscriptions

•Batch cook and freeze meals for after the birth — this saves money and time when you're sleep-deprived

•Accept hand-me-downs — babies grow fast and barely wear most clothes

•Buy second-hand where safe to do so — items like moses baskets, prams, and baby clothes

Read our guide on how much a baby costs in the UK for a detailed breakdown of what to budget for.

Step 6: Maximise Your Benefits

Child Benefit

Calculate your Child Benefit — it is worth up to £27.05 per week for your first child in 2026/27. Even if you or your partner earns over £60,000 and is subject to the High Income Child Benefit Charge, it is still worth claiming to protect your National Insurance record and State Pension entitlement.

Tax-Free Childcare

Open a Tax-Free Childcare account before your return to work. The government tops up every £8 you pay with £2, saving you up to £2,000 per year per child.

Sure Start Maternity Grant

If you are on certain benefits and expecting your first child, you may be eligible for a one-off Sure Start Maternity Grant of £500.

Annual Leave

Remember you accrue annual leave during maternity leave. You can use this to extend your paid time off or receive a payout. This can add several extra weeks of income to your maternity leave.

Step 7: Universal Credit and Benefits During Maternity

If your income drops significantly during maternity leave, you may become eligible for additional financial support:

•Universal Credit — you may be able to claim if your household income falls low enough. Both Statutory Maternity Pay and Maternity Allowance are counted as income for UC purposes, but you may still qualify depending on your circumstances.

•Council Tax Reduction — your local authority may reduce your council tax bill based on your reduced income during maternity leave

•Housing Benefit or Universal Credit housing element — if you rent, check whether you qualify for help with housing costs

•Free NHS prescriptions — all pregnant women and new mothers (for 12 months after birth) qualify for free prescriptions with a valid maternity exemption certificate

•Healthy Start vouchers — if you're on certain benefits, you can get vouchers for milk, fruit, and vegetables

See our full guide on benefits during maternity leave for a complete list of everything you may be entitled to claim.

Step 8: Employer Benefits

Check whether your employer offers:

•Enhanced maternity pay above the statutory minimum — many employers pay full salary for a set number of weeks

•Salary sacrifice schemes that could save money on childcare or other costs

•Employee assistance programmes for free financial advice and counselling

•Childcare support or workplace nurseries

•Keeping in Touch days — up to 10 paid days during your maternity leave for extra income

Month-by-Month Financial Checklist

6+ Months Before Due Date

• ] Calculate maternity pay with our [Maternity Pay Calculator

•[ ] Start saving for the income gap

•[ ] Review and reduce expenses

• ] Check if you qualify for [enhanced maternity pay

3–6 Months Before

•[ ] Set up a detailed maternity leave budget

•[ ] Build an emergency fund (aim for 3 months' essential expenses)

• ] Claim your [MATB1 certificate

•[ ] Notify employer of maternity leave plans

• ] Check your eligibility for [Sure Start Maternity Grant

1–3 Months Before

•[ ] Stock up on baby essentials

•[ ] Batch cook meals for the freezer

•[ ] Ensure all bills are up to date

•[ ] Apply for Child Benefit in advance

• ] Read our guide on [how much a baby costs

During Maternity Leave

•[ ] Track spending against budget

• ] Claim all eligible [benefits

• ] Plan [return to work finances

• ] Arrange [childcare if returning

• ] Consider opening a [Tax-Free Childcare account