Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance. We’re chatting all things personal finance, from contracting rights in the workplace to expert mortgage advice and saving for your first home, to ISAs and dealing with debt, to help empower you to make better choices. Now more than ever, it's important to understand our money, but so many of us feel as if we don't have a handle on it – or worse, feel anxious and scared about money.
So each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will give her easy tips on how to tackle it.
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Lauren* is a 35-year-old woman who is about to go on maternity leave. She lives in Birmingham – after moving there with her partner to be closer to her family and to save money – and is concerned that her statutory maternity pay won't be enough to cover her expenses. Her partner earns £2,500 per month, but she is struggling to envisage how much they will earn after paying for bills, mortgages, and childcare.She is also about to buy her first home, which will use up most of her savings.Here she shares her money diary:MY ACCOUNTS
Current account: £900
Savings account: £40,000
MY INCOMINGS
Annual salary pre-tax: £60,000
Annual salary post-tax: £45,000
Monthly wage pre-tax: £4,150
Monthly wage post-tax: £3,400
Other incoming payments: £0
MY OUTGOINGS
Rent/mortgage: £1,750
Bills: £600
Splurges: £300
Other: £0
Any student loan/credit cards/overdrafts etc: £100 on student loan per month
MY MONEY THOUGHTS
My worst money habit: Eating dinner with friends twice a week (no alcohol).
My biggest money worry: Life on one salary + maternity pay. Life post-maternity leave with childcare costs.
My financial hopes for the future: To pay off our house, have a couple of holidays a year and provide a comfortable life for our new family.
Current money mood: 😓😠
WHAT MONEY EXPERT MAKALA GREEN SAYS:
Makala Green is a multi-award-winning Chartered Financial Adviser at Schroders Personal Wealth and has over 18 years of experience in the financial industry. She understands managing money can be complicated and confusing, which is why she is passionate about making financial planning more accessible for all. She is also the Author of The Money Edit; a no shame no blame guide to taking control of your money.
You're not alone!
Maternity leave is meant to be a relaxing time you can spend with your new baby without the stresses of life getting in the way. Unfortunately, this isn't always the reality nowadays, so you're certainly not alone if you feel worried or scared about the impacts and increases in the cost of living after having a baby. However, a little preparation and a clear plan will give you the financial confidence to worry less about your money and focus more on being a new mummy.
Budgeting with a baby
If you haven't started already, then creating a household budget is a good place to begin. It lets you see what you're spending money on and if and where to cut back. Try to decide how much additional costs you will spend on food, nappies, clothes, treats, toys, etc. A useful calculator is available on money helper. Ideally, you want to set a clear budget to realistically work with before the baby arrives. There are loads of budgeting phone apps, such as Plum, Monzo or even high-street banking apps, that can help you keep on top of your finances wherever you are. If you prefer to use cash, you can make a plan on paper and opt for envelopes or a money pot. Once you are aware of your budget, you can work backwards to see what is affordable and what is not. Get frugal with shopping; try setting a template of selected items you will likely purchase and see what your ideal weekly shop averages to; you can also save searches and set orders to deliver to your home to save you money and time from popping into the supermarket. Batch cook before the baby arrives or have a handy list of easy recipes the family love.
Get financially prepared
Just like you would pack your baby's hospital bag weeks before arrival, you need to get all your finances in order ahead of time to give you peace of mind. The first step to preparing for maternity leave financially is to start as soon as you've set your paid maternity leave date. Make sure you add any annual leave you are entitled to, as this can be added to the start or end of your maternity leave to extend the time with your newborn without being financially disadvantaged. Check your contract to see what you are entitled to, as some employers may offer enhanced benefits in addition to Statutory Maternity Pay (SMP). Ask yourself, how long do you plan to take off? Do you consider any major changes, such as buying or selling your car for a bigger or family-friendly one? Do you need to amend your home or decorate it? Make a list of the items you want to purchase and consider major outlets for discounts, eBay and charity shops to keep costs down. People often struggle with the perfect gift for a newborn, so why not make their life and yours easier by making a list of all the "would love to haves" for people to buy when the baby comes?
Money and motherhood
Childcare is likely to be your biggest monthly expense as a parent. The average nursery charges around £53 for a full day, the equivalent of £1,143 a month for a full-time place. Often just as much as mortgage or rent. The good news is in the recent Spring Budget, the Chancellor announced that children between nine months and four years in England with two working parents would soon be eligible for 30 free childcare hours a week. The benefit will be staggered from September 2024; all working parents (at least 16 hours a week) will be eligible for 15 free hours of childcare for children aged between nine months and two years old. You may be encouraged to for back to work full-time, reduce hours or have a more flexible working pattern that works around your new family. Remember to claim for benefits you're entitled to, such as child benefits, tax credits or working tax credits. (for further details, visit Gov.UK)
The future and family
Financial planning for your future is key to creating a solid strategy for managing your money as you move through different life stages. Whether opening your child's first savings account when they are born, such as a Junior ISA, that offers a tax-efficient way to save for your child's future. Clearing debts or simply avoiding using credit cards during pregnancy as the start of debt can easily spiral out of control, and you could face difficulties paying back when your finances change, such as lower income or higher expenses. Likewise, building a healthy pension for your retirement. Building a financial plan might seem overwhelming initially, as there's a lot to consider, so I suggest taking baby steps instead of big leaps. I recommend speaking with a financial professional who can provide a personalised plan.
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