First-time UK parents’ finances in their baby’s first year

​

Having a baby can put significant pressure on family finances. But how much does becoming a parent actually cost, and how does the UK’s parental leave system affect mothers and fathers differently?

Our new research, The Big Squeeze, explores the finances of two typical first-time parent couples in their baby’s first year: one where both parents work full-time for the National Living Wage, and one where both are on average earnings.

​

We look at how their income changes when they take maternity and paternity leave, the additional costs they face after having a baby, and what different choices about parental leave mean for their household finances.

 

Our analysis finds that the financial squeeze can be substantial. If both parents take their maximum leave under the current system, an average-earning couple sees their joint income fall by around 34%, while a couple earning the National Living Wage sees theirs fall by around 30%.

 

But the impact is far from equally shared. Mothers experience by far the largest loss of income, while fathers lose relatively little because the current system gives them so little paid time away from work. This creates a powerful financial incentive for fathers to remain in full-time work and mothers to take on the majority of care.

 

The report also explores how a better-paid six weeks of leave for fathers, including a ‘daddy month’ when fathers can take over as the main caregiver, could help families financially while supporting a more equal sharing of care.

 

Download the full report, The Big Squeeze: First-time UK parents’ finances in their baby’s first year, or read our quick summary of the key findings.