Having a baby is one of the biggest shifts your household finances will ever face. Your income is likely to dip while you are on parental leave, and your outgoings will rise at exactly the same time. Getting a clear picture before your due date gives you more options than trying to catch up afterwards.
What changed
This page has been updated to reflect current UK entitlements, cost figures, and signposting for free money guidance. Key updates include current Statutory Maternity Pay rates and the earnings threshold for eligibility, updated free childcare hours guidance for England following changes that extended entitlements to children from nine months old, and refreshed links to free debt and budgeting support services.
Why it matters
Many new parents find that parental leave pay is lower than expected. SMP, for example, drops to a flat-rate amount after the first six weeks, which can be a significant cut for anyone on an average or above-average salary. Planning for that gap before your baby arrives is much easier than managing it on no sleep with a newborn at home.
Who may be affected
This update is relevant if you:
- Are pregnant or planning a pregnancy and want to start mapping your finances.
- Are the primary earner and expecting your household income to drop during leave.
- Are self-employed or on a zero-hours contract, where statutory pay entitlements work differently.
- Already feel stretched month to month and want to act before costs increase.
Three practical steps worth taking now
1. Find out exactly what your income will be on leave
Statutory Maternity Pay is paid for up to 39 weeks. The first six weeks are paid at 90% of your average weekly earnings. After that, it drops to the standard weekly flat rate set by the government (or 90% of average earnings if that is lower). For 2024/25 that flat rate is £184.03 per week, rising to £187.18 per week from April 2025. To qualify for SMP at all, you must have average weekly earnings of at least £123 before tax. Both figures are published on GOV.UK. Your employer may top this up, but many do not.
If you are self-employed, you may be entitled to Maternity Allowance instead, which is worth checking via the UK government website.
It is also worth noting that if your partner or co-parent takes leave, Shared Parental Leave (SPL) allows eligible couples to share up to 50 weeks of leave and up to 37 weeks of Statutory Shared Parental Pay between them. Statutory Paternity Pay follows the same flat-rate structure as SMP. Details are on GOV.UK.
A useful first step is to calculate what you will actually receive each week once you move to the flat rate, then compare it to your current monthly outgoings. That number is the gap you need to plan for.
2. Map the one-off costs before they arrive
Baby equipment costs can be significant. A useful way to approach this is to separate the things you need before birth (a car seat, somewhere for the baby to sleep, feeding equipment) from the things you can acquire over time or secondhand.
Some families find costs spiral because they do not separate the essential from the nice-to-have early enough. Writing a list and pricing each item can help you avoid buying things twice. MoneyHelper and Which? both publish indicative first-year cost estimates that can give you a realistic starting figure to work from.
The MoneyHelper budget planner is free to use and designed for UK households. It can help you build a side-by-side comparison of your current budget and your expected budget on reduced income.
3. Check your entitlements, you may be missing something
There are several UK benefits and entitlements that apply to new parents, including:
- Child Benefit, which most families can claim regardless of income. However, if either parent has an individual income above £60,000, the High Income Child Benefit Charge begins to apply, and it withdraws the benefit entirely once income reaches £80,000. These thresholds have applied since April 2024, as confirmed by GOV.UK.
- Free childcare hours in England: eligible working parents of children aged 9 months to 2 years can access 15 funded hours per week, and parents of 3 and 4 year olds can access 30 funded hours per week. To qualify for the extended hours you generally need to be in work and earning at least the equivalent of 16 hours at the National Minimum Wage. Full eligibility conditions are on GOV.UK. Scotland, Wales, and Northern Ireland have separate schemes.
- Healthy Start vouchers, if you are on certain benefits or under 18, for food, milk, and vitamins. You can apply on GOV.UK.
- Sure Start Maternity Grant, a one-off payment of £500 for families on certain benefits having their first child, available via GOV.UK.
Start with the GOV.UK benefits calculator and the MoneyHelper guide to benefits for families to make sure you are not leaving anything unclaimed.
What to do if the numbers do not add up
If you run the numbers and your income on leave does not cover your essential outgoings, try not to let that sit unaddressed.
A few things that may help:
- Talk to your employer early about any enhanced maternity or paternity pay they offer.
- Check whether you can shift any large purchases (new car, home improvements) to before or after your leave window.
- If you are considering borrowing to bridge the gap, look at the full cost of borrowing before you commit, not just the monthly repayment.
If you are already in debt and worried about how you will manage, free help is available. You do not need to figure this out alone.
StepChange: 0800 138 1111 National Debtline: 0808 808 4000 MoneyHelper: 0800 138 7777
What to read next
If you are thinking about whether borrowing could help you manage a financial gap around parental leave, the following guides may be worth reading first:
- Personal loans guide, how personal loans work, what APR means in practice, and what to check before applying.
- Getting financial advice, when free or paid advice can help, and how to find a regulated adviser.
Sources
- MoneyHelper (formerly Money Advice Service), budgeting tools and family benefits guidance.
- Citizens Advice, maternity and baby costs guidance.
- GOV.UK, Statutory Maternity Pay rates, free childcare entitlements, Child Benefit and High Income Child Benefit Charge, Sure Start Maternity Grant, Shared Parental Leave.
- StepChange Debt Charity, free debt advice service.
- National Debtline, free debt advice service.