According to a survey of 2,000 new parents conducted by money.co.uk, some 40% of new mums and dads in the UK are forced to cut short their leave because they can’t afford the time off.
The report showed that despite receiving the reduced pay they are entitled to, new parents underestimate the costs of staying at home and looking after their new-born, and lower incomes see many maxing out credit cards and getting into ‘serious debt’.
40% of new parents also claim that the rules surrounding maternity and paternity leave, and the associated financial allowances, are unfair to new parents. A further 21% added that it is impossible to survive on maternity and paternity pay alone, while 60% admit they underestimated how much it would cost to have a baby.
The report added that for one in six couples, both parents had to cut short their parental leave because the salary reduction meant they couldn’t afford to stay home with their baby. An additional 25% of new parents said at least one of them couldn’t take advantage of their full parental leave entitlement, due to financial concerns.
Some 26% of respondents then said that the cost of having their first child was so financially stressful that they are unlikely to consider having more children.
Speaking on the data, Money.co.uk personal finance expert, Salman Haqqi, said that: “It is clear from our research that a large number of new parents have to end their maternity or paternity leave early because not doing so would leave them in serious financial trouble.”
“Unfortunately, for many of those we surveyed, the realisation that they couldn’t afford to take their full maternity or paternity leave didn’t occur to them, until they were already on leave and after they had brought their new baby home.”
The survey added that almost one in five new mums took less than half of their maternity leave allowance, due to financial strains. It continued, stating that more than a third of new mothers polled said their maternity leave had been shorter than they’d planned due to financial issues, with 55% of mums and dads saying they found maternity leave stressful because of reduced income.
An additional 41% of parents stated that they got into financial difficulties as a result of their reduced income during maternity and paternity leave.
Mr Haqqi adds: “Taking into account the reduction in their earnings and allowing for any savings they were forced to use to supplement their income, a quarter of new parents say that taking maternity or paternity leave cost them between £5,000 – £10,000.”
“Many parents have said they have been forced to switch to a budget supermarket, use less energy at home, cancel holidays and subscriptions like Sky TV or Netflix in order to manage their finances more economically during parental leave.”
“In fact, 15% say they maxed out their credit cards to get them through it financially.”
Despite these facts, one in ten UK couples surveyed claimed lockdown has led them to plan a new baby. Of this number, 18% live in London, 18% in the North-east, and 14% in Yorkshire and the Humber.
In response to the financial issues facing new parents, money.co.uk developed a parental leave calculator, to help future parents make better-informed decisions about maternity and paternity leave.