Managing Your Finances During Maternity Leave

Managing Your Finances During Maternity Leave

Navigating finances during maternity leave is crucial for Australian moms. Discover tips to manage this transformative time effectively.

Welcoming a new addition to the family is an exhilarating journey, but it comes with its own set of challenges, particularly in terms of finances. For new mothers in Australia, managing finances during maternity leave is a critical aspect of preparing for parenthood.

In this article, we will delve into the financial realities that arise during maternity leave and provide practical tips on how to effectively manage your finances during this transformative period.

Maternity Leave in Australia: Financial Realities

Maternity leave in Australia typically extends for up to 12 months, during which new mothers are eligible for various government benefits and employer-provided leave. Services Australia, in particular, mandates that starting for births or adoptions after 1 July 2023, the Parental Leave Pay (PLP) gross payout stands at $176.55 a day, or $882.75 a work week. A parent in a couple can receive it for up to 90 days.

However, benefits like PLP might not fully replace your regular income, leading to a potential financial strain. This abrupt reduction in earnings can create a challenge, especially when coupled with the additional costs associated with caring for a newborn.

Managing the Costs of Parenthood

The journey into parenthood introduces an array of new expenses that need to be incorporated into your budget.

Medical Expenses

From prenatal checkups to postnatal care, medical costs can accumulate rapidly. Make sure you are aware of any out-of-pocket expenses and factor them into your budget.

Baby Essentials

Diapers, clothing, baby gear, and nursery items are essential expenditures. Consider budget-friendly alternatives, such as buying second-hand items, to alleviate costs. When it comes to nappies, Raising Children AU recommends using cloth nappies over disposables to prevent rubbish buildup and make cleaning easier. 


If your plan involves returning to work after maternity leave, childcare costs will become a significant factor. Research and budget for various childcare options to determine the most feasible solution for your family.

Income Reduction

The decrease in income during maternity leave can be daunting, especially if the mother has a partner who might be the sole income-earner for their household. Preparing for this drop in earnings is crucial for maintaining financial stability.

Strategies for Effective Budgeting During Maternity Leave

Maternity leave can be a tedious time for a new mum, in many aspects, but they can be managed to alleviate stress and the purse.

Anticipate and Prepare

Ideally, initiate financial planning for maternity leave well in advance of your due date. Evaluate your current financial situation, calculate your expected maternity leave benefits, and ascertain the extent of the potential financial gap.

Develop a Comprehensive Budget

Establish a thorough budget that encompasses all your expenditures, including essential bills, groceries, transportation, and existing debts. This will provide you with a clear overview of your financial commitments.

Emergency Fund

Maintaining an emergency fund is imperative, particularly during maternity leave. This fund acts as a safety net for unexpected expenses or emergencies that might arise.

Review Your Insurance

Confirm that you have adequate health and life insurance coverage to safeguard both you and your growing family against unforeseen medical costs or circumstances. The federal government’s MoneySmart portal states that if you decide to have all pregnancy and natal costs covered under private insurance, be aware that the waiting list might go as long as 12 months.   

Prioritise Spending

Distinguish between needs and wants. Focus on covering essential expenses and consider reducing discretionary spending to manage your finances more effectively.

Leverage Government Benefits

Review all of the government-mandated benefits available to Australian mothers, such as Parental Leave Pay, the Pharmaceutical Benefits Scheme, and the Family Tax Benefit. These benefits can offer supplementary financial support during this period. You must consult Services Australia and the Department of Health and Aged Care to determine which assistance benefits apply to you.

Open Dialogue with Creditors

If you have existing debts, like credit card balances or loans, consider engaging in discussions with creditors to establish more manageable repayment terms during your maternity leave.

Save During Pregnancy

If possible, allocate a portion of your income during your pregnancy to create a financial cushion for the months of reduced income. In that aspect, that saving can be angled into some investment for the child: writing for Money Magazine, Michelle Ives said if there’s some disposable cash, you can build an investment portfolio with your child as the trustee, then turn it over to them when they turn 18. 

Stay Informed

Keep yourself informed about your workplace rights, including entitlements to maternity leave, flexible work arrangements, and options for gradually resuming work.

Explore Flexible Work Options

If your skillset permits, explore opportunities for freelance work or remote employment during your maternity leave. This could supplement your income while allowing you to spend quality time with your baby. According to current rules in Australia, employed mothers can even arrange work-from-home for up to 52 weeks’ unpaid leave or 20 weeks’ PLP.


Maternity leave is a precious time to bond with your newborn, but it also presents financial challenges. By understanding your benefits, devising a budget, and planning for the financial adjustments that parenthood brings, you can ensure a smoother transition into this new phase of life. Remember, maintaining open communication with your partner and seeking financial advice if necessary can provide additional support and guidance throughout this journey. With thoughtful planning and adept financial management, you can navigate maternity leave while providing the best for your growing family.

DISCLAIMER:  This article is for informational purposes only. 2 Ezi has no relationships with any government agency or individual mentioned.

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