The week before Christmas I was told I was at risk of redundancy. I was eight weeks pregnant and it was fair to say I panicked.
We had already been preparing ourselves for a frugal second half of 2017 as I’d only receive Statutory Maternity Pay (SMP) but now we were facing the prospect of losing a half our household income and receiving no maternity pay whatsoever. It was time we took a cold hard look at our finances.
Luckily in mid-March I found my job was safe but the steps we took in those 3 months have set us in good stead for my forthcoming maternity leave.
So whether you’re about to go on maternity leave, facing a reduction in your household income or just want to cut back a little the following tips might help you budget and make what you’ve got go a little further.
Cut out unnecessary expenditure
First things first, sit down and list every single piece of expenditure you have in a month. If, like us, you’ve always been a bit laissez faire with your finances as long as you’ve got enough money to last the month then this can be pretty confronting but we found it really help show us where we could cut back.
Some of it was easy – take my own lunch to work rather than buy it– some of it was hard – a monthly donation to a charity close to my heart – but I’m a big believer in cutting your coat to suit your cloth.
Have a Plan B
When you’re on a diet it seems the more you deny yourself something the more you want it and the harder it is to stick to plan. We found budgeting the same so we didn’t cut out all our treats straightaway but we were prepared to do so in the future if needed.
For example we have a Netflix and Google Play, which if we’d cancelled would have saved us £15 a month. A few months down the line we may need to save this money but for the time-being we can stretch to cover them.
Choose a good annual pass and use it
One of our ‘Plan B’ items was National Trust membership. We decided to keep it but use it more instead of paying to go to other places.
National Trust might not be for you but if you have kids you’re going to need to go out and it is much more cost effective to get an annual pass/ membership to somewhere than shell out each time you visit. If you choose wisely you’ll get lots of lovely days out for a fraction of the cost.
Embrace the free
If you can’t stretch to an annual pass or you need a bit of variety then embracing what is free in your area is great.
We’re lucky that we live in a city that has free museums but in recent months we’ve rediscovered our local library and church playgroups which are much cheaper than soft play and my daughter gets just as much out of them.
Avoid ridiculous interest rates
I don’t know if this is good advice or not but we got out an interest free credit card and paid for our car insurance on it.
Usually we’d pay this monthly as there’s no way we could pay it as a lump sum but the interest rate charged by insurers is incredibly high. This way we still make a monthly insurance payment but it’s paying off the one-off payment we made on the credit card and it’s not incurring any interest.
Don’t activate credit card
Whilst we’re talking of credit cards this is something I’ve done to curb my impulse buying. I’ve never been a particularly reckless spender but I’d often have a little splurge on my credit card when my current account was running low.
I’d always pay it off the next month but it was a bad habit. In order to break it I ordered a replacement credit card, which I keep with me in case of emergencies (unlike the above interest free credit card that stays locked up to avoid temptation) but I didn’t activate it. That way if I’m ever tempted to use it there’s an extra stage to spending on it and that’s enough to make me consider whether I really need what I’m about to by.
It’s been three months since I started this and my card is still not activated.
Food shop in cash
Unsurprisingly after our mortgage, one of our biggest expenses was food. We’d already switch to ALDI during my last maternity leave which has saved us an incredible £20 – £30 a week but there was definitely still room to shave a few more pounds off.
We worked out that it was the little bits of shopping we did during the week that really added up; the bar of chocolate we bought when we popped out for milk or the magazine we let our daughter have without checking the price. So we decided that each week we’d get £60 out to cover our food.
We’d pay for our main shop in cash and then what was left over would be used for the extra bits and bobs we needed. I thought it would be quite difficult to stick within that budget but actually we adjusted immediately – using cash rather than card really helped us focus on the cost of things and most weeks we had a few quid to spare which we either put towards the next week or used for a little end of week treat.
Make treats treats
We’d fallen into the habit of grabbing a takeaway on the way home from work because we couldn’t be bothered to cook or going out for a coffee and slice of cake on a Saturday because we were a bit bored.
Cutting back on these things hasn’t only made a difference to our bank balance but it also means we appreciate them more when we do splash out.
Save while you can
It’s very tempting to live like a Queen when you’re earning and struggle as a pauper when you’re not but I decided whilst I was still earning a proper wage to save some of it to help see us through the tighter months.
Since the beginning of the year, as soon as I’ve got paid I’ve transferred a third of my wage into savings meaning I now have enough saved up to boost SMT for a good few months. Surprisingly I haven’t found it as difficult to live on this reduced amount as I thought. I don’t actually know what I spent my money on before (I do – unnecessary crap).
Use children’s birthday/ Christmas money wisely
My daughter is lucky to have some very generous people in her life and her money box is often better filled than mine.
Previously I’d use the money to get her new toys when I saw something I thought she’d like. This year because I knew money would be tight I’ve used it to pay for her ballet and football lessons. She gets so much out of these weekly classes and I’d hate to stop them because we couldn’t afford them.
I was a bit worried people might be disappointed that we weren’t buying her new stuff with their gift money but they’ve all been really chuffed that the money is being used for something she loves each week.
I don’ t think any of the above is particularly ground-breaking but they have made a big difference to us and our lifestyle hasn’t changed dramatically. Hopefully there might be a few tips in there that will help you if you’re faced with a significant drop in income.