Unpaid parental leave: how to cover the costs
In the UK, aside from statutory maternity and paternity leave, parental leave is unpaid. However, you are entitled to take 18 weeks of parental leave for each child or adopted child under 18. But how can you calculate the costs of unpaid parental leave and factor it into how you work across the year? Sometimes, taking unpaid parental leave is essential and unavoidable – if you have an ill child, for example. But it could leave you with a shortfall or struggle to make ends meet. You can always crowdfund for emergency financial assistance should you need to – start a GoFundMe today.
Why new parents might seek financial help
There are a number of factors why new parents might need to seek financial help to make ends meet with unpaid parental leave. There’s a discrepancy in a lot of workplaces as to how long paid paternity leave lasts – according to this report from The Fatherhood Institute, the UK is amongst the worst in Europe for paid paternity leave. But that doesn’t mean dads don’t want to spend time bonding with their new babies and supporting their partners, so they may resort to taking unpaid paternity leave to have that extra time off. This could lead to cashflow issues if one or both salaries are reduced. It also costs thousands to raise a child – and many feel that having time off work at the start is essential and therefore need to factor their own financial situation in.
How does unpaid parental leave work?
Unpaid parental leave is time off you as a parent are entitled to – but you don’t get paid for it. It could be that you want to take more time than your company allows for maternity leave, or more commonly paternity leave as the allowance is shorter.
How to cover the cost of unpaid parental leave
There are a number of ways you can make it easier financially if you’re embarking on parental leave – from budgeting week to week to making sure you’re claiming every benefit you are entitled to in the situation.
Budget in advance
Having and raising a child is expensive – we all know that. That’s why it’s worth sitting down and working out your household income, outgoings and if there are areas where you’ll need to make cut backs if you decide to take unpaid parental leave. It will also lend clarity to whether you’re entitled to any benefits or charity support, detailed below, to ensure you’re getting the help you need.
Check your benefits entitlement
When you’re looking at your financial situation in terms of taking unpaid parental leave, make sure you’re checking the benefits you’re entitled to. There’s a lot of different criteria for each kind of benefit, so check on the Gov.uk website.
Crowdfunding
Online fundraising is a popular choice for seeking help paying bills while on parental leave. If you’re raising money because your work doesn’t have a paid parental leave policy, create a fundraiser that shares your story honestly. It will help your social connections empathise with what you’re going through, if they haven’t already gone through it themselves. GoFundMe helps thousands of people raise funds to help offset unpaid parental leave.
Charities
If you are still struggling to come up with the funds, you can turn to charities that assist mothers in providing the basics for their babies. Gingerbread, for example, provides support to single parent families where needed.
Other considerations for your parental leave budget
- If your job offers paid time off, try to maximise your holiday days before the baby arrives. That way, you can count on at least a few paid days.
- Look into part-time work during your pregnancy. Just keep in mind that as you get closer to your due date, some types of physical labour may be inadvisable.
- Find a support group. Friends with little ones who have outgrown their baby supplies might be able to offer second hand cribs or car seats, cutting down on costs.
Look out for hidden costs
As you look for help paying bills while on maternity leave, keep in mind there may be hidden costs you didn’t expect. For Barbara, that happened when the paid portion of her maternity leave turned out to be not so paid. Since pregnancy is a pre-existing condition, insurance premiums go up to cover pregnant employees, and sometimes companies pass the bill to the employee herself.
“I was surprised when I was told that I had to repay the insurance premiums,” she said. “No one had mentioned this before so it was not something I’d budgeted for after six weeks of a partial salary and six weeks without any income.”
The social and economic consequences of unpaid parental leave
The overall costs of having and raising a child totals hundreds of thousands. According to Moneyfarm, the average cost for raising a child in the UK is £200k. Taking as much leave as you can when you have a baby is necessary, beneficial to both the parent and child, and can make some cherished memories. But it’s important to ensure you’ve covered all bases cost wise and have worked out what works for you. Parents are more likely to report increases in their cost of living and generally it’s acknowledged that the needs of parents are underappreciated by employers. These are all factors to bear in mind when considering taking your unpaid parental leave.