Savings needed to cover the income gap during maternity leave

The Income Cliff

Most statutory maternity pay schemes replace a fraction of salary. SMP pays 90% for 6 weeks, then the lower of 184.03/week or 90% for 33 weeks, then nothing for the remaining 13 weeks of the 52-week entitlement. has no federal paid leave; state programs vary from none to 12 weeks at 70% pay. Employer top-ups close part of the gap but rarely all of it.

The Three Variables That Matter

Expenses during leave (up 10-30% from baseline due to baby costs), income during leave (typically 20-60% of pre-leave), and leave length interact multiplicatively. A 12-month leave at 30% pay replacement against 115% baseline expenses needs dramatically more savings than a 3-month leave at 70% replacement.

Building the Savings Before

Common practice is to target 6-12 months of monthly expenses in a dedicated pre-leave savings account. This calculator makes that target concrete by subtracting known leave-period income from known leave-period expenses. The output is the hard dollar figure that needs to sit in the account before leave starts.

Quick example

With normal monthly income of 4,000 and statutory or employer monthly pay during leave of 1,200 (plus leave length of 39 and current maternity savings of 5,000), the result is 11,220.87. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Normal Monthly Income (After Tax), Statutory or Employer Monthly Pay During Leave, Leave Length, Current Maternity Savings, and Monthly Household Expenses. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Leave length in months equals weeks divided by 4.33. Income during leave equals monthly pay times leave months. Expenses during leave equals monthly expenses times leave months. Shortfall equals expenses minus income. Savings gap equals shortfall minus current savings. Results are estimates for illustration purposes only. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

What the number doesn't include

Life events generate side costs: time off work, travel for guests, aftercare, lost weekends. The figure here covers the direct costs. Noting the indirect ones alongside avoids the post-event surprise.

What this doesn't capture

Life events generate side costs the figure doesn't include: time off work, lost income, travel for others, aftercare. Add 10–15% to the direct number as a buffer; the items you haven't thought of usually fill most of it.