The financial impact of motherhood

Becoming a parent is a life-changing experience that brings immense joy and new responsibilities. For many women, this transition also means navigating significant financial changes. Understanding how to manage finances effectively during this period is important for ensuring long-term financial stability for you and your family.

Understanding the financial changes

Motherhood often leads to a reduction in disposable income and an increase in expenses. Our recent Women and Wealth report found that 57% of women experienced a decrease in disposable income after becoming a parent. This can make it challenging to maintain previous savings or investment levels, with 32% of women struggling to do so.

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When women go on maternity leave, they may experience a sense of financial vulnerability as their previous financial independence becomes limited. This shift often results in increased reliance on their partner's income to support the household. The immediate needs of the new baby can make it easy to focus on short-term financial goals, such as purchasing baby essentials and managing day-to-day expenses, while longer-term financial goals, like saving for retirement or investing, may be deprioritised.

This period can be challenging as women navigate the balance between caring for their newborn and maintaining financial stability, often leading to feelings of uncertainty.

How to manage your finances after becoming ‘mum’

Despite these challenges, women are incredibly resilient and, with careful planning, can keep their finances on track even during a career break to look after a child. With a proactive approach, women can balance their immediate needs with long-term financial goals, helping to ensure that their financial wellbeing remains protected while they focus on their growing family.

Create a detailed budget

Start by assessing your current financial situation and creating a detailed budget. Track your income and expenses to identify areas where you can cut back. Prioritise essential expenses and allocate funds for savings and investments.

Build an emergency fund

Having an emergency fund is key for managing unexpected expenses. Aim to save at least three to six months' worth of living expenses. This fund can help provide a financial cushion during times of uncertainty, such as a career break or unexpected medical costs.

Focus on long-term goals

While immediate financial needs are important, don't lose sight of long-term goals. Nearly half of the women surveyed in our Women and Wealth report prioritised building emergency savings, and 42% focused on saving for their child's education. Set clear financial goals and create a plan to aim to achieve them.

Explore flexible work options

Consider part-time or freelance work to supplement your income during a career break. This could help you maintain financial stability while balancing the demands of parenthood. According to our report, 30% of women turned to part-time or freelance work to manage their finances.

Cut non-essential spending

Review your expenses and identify non-essential spending that can be reduced or eliminated. Two-thirds of the women we surveyed cut down on non-essential spending to manage their finances. This can free up funds for savings and investments.

Seek financial advice

Access to professional financial advice for women can be invaluable. However, only 11% of women we spoke to received financial counselling. Consider seeking advice from one of our qualified Personal Wealth Advisers to help you create a comprehensive financial plan tailored to your needs.

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Utilise support systems

Lean on support systems such as family, government assistance programs, and employer-provided benefits. Over half of the women we surveyed received financial support from family, and 32% benefited from government programs. These resources can help ease the financial burden during parenthood.

Motherhood brings both joy and financial challenges. By understanding the financial impact of becoming a parent and implementing effective strategies, women could navigate this transformative period with confidence.