Surviving on a reduced salary

Surviving on a reduced salary

Are you ready for a drop in income? Surviving on a reduced salary is part and parcel of maternity leave but there are ways to adapt.

If you’re planning to take time off work to have a baby, you may have to adjust to earning a little less, in the short term at least. How much your income is likely to drop depends on the maternity benefits your work offers, so the first thing to do is talk to your boss and human resources department.

Budgeting for a baby

Some women are lucky enough to work for companies where the maternity benefits are over and above the Statutory Maternity Pay set by the government. But check the details as this may come with conditions.

It’s important to carefully budget so you can work out how long you can afford to take off:

  1. Start with a detailed plan of your outgoings. Any money you can save in advance will help.
  2. Look at your budget to see where you can save money both before and after the baby is born. Are there unnecessary direct debits going out? Prioritise what’s important to you and what you can live without, for a while at least.
  3. This applies to you both! While some couples keep their finances separate and others pool everything, maternity leave is a time to look at your joint resources and start thinking in terms of ‘family expenditure.’
  4. This is a good time to rein in on your credit and store cards. Try to clear any outstanding debt on them before the baby arrives and then avoid using them while your salary is reduced. Why not check the MAS budgeting calculator to see how much your income and spending could change in the early days.

Bills

Being at home with the baby will impact on certain bills so consider the following:

  1. Utility bills tend to be higher if you’re at home all day, so check with uSwitch to make sure you’re getting the best deals on gas and electricity.
  2. Food bills are also likely to increase as you’ll be eating the majority of your meals at home, but with a little shopping savvy you can keep costs down. Keep an eye out for promotional offers, and learn to think big – buying in bulk and cooking up batches of your favourite meals to freeze for later.
  3. Many women find they spend more on shopping and incidental items. Being at home with the baby may mean more trips to the shop or meeting friends for coffee or lunch and this can soon add up. So try balancing trips to the coffee shop with trips round your friends.
  4. If you do go out in the evening babysitting costs can add to the expense. Team up with likeminded friends or neighbours to create a babysitting club– a great way to get out of the house without spending a fortune.

Savings

It’s not all bad news, and some things will even be cheaper for a while.  If you have a monthly gym membership or union subs ask if you can take a break from payment while you’re on maternity leave. Often they will let you stop for the length of your leave and then start again when you return to work without having to pay a joining fee again or similar.

Other areas you can look to make savings in are:

  1. Going out. Chances are you won’t be going out as much as you did before you had children so you’ll save money on meals out, cinema, and the pub.
  2. Transport, especially if you were doing a big commute for your job.
  3. Borrow and swap things with your friends and family to save money. These can range from baby equipment and clothes to books, DVDs and trading babysits.
  4. Economise. Look at your grocery bill; can do without some of the more expensive items? Write a list of items that you really need and stick to it. And practice the art of bargain-spotting, snapping up offers whenever you can.

For more ideas on how to save, visit our budgeting page or the money matters forum.

Last, but not least, look at your pension and savings. Try to maintain your contributions while you’re on maternity leave. If you do need to reduce your contributions, budget to keep some money still going in, if at all possible. Your company may well offer to keep its contributions the same if you’re in a company pension scheme, but you’ll need to check this.

With KidStart you can save for your child’s future without it costing you a penny! Find out here how you can turn every day shopping into savings for your children.

IMPORTANT NOTE: This feature is for guidance only and is not intended to be a substitute for professional financial advice.