Family finance: heading back to work after maternity leave

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Thirty-odd years ago the ‘norm’ was to have a working father and a stay-at-home mother, but nowadays just over half of all mums with partners have returned to work in some capacity before their youngest child has turned two, with that figure rising to almost 80 per cent of mothers with teenagers.

According to the Australian Bureau of Statistics, the workforce participation of women has steadily increased over the past three decades and has now reached the point where you may well be fielding questions about your career before you’ve checked out of the maternity ward!

The ‘right’ time to go back to work will vary from person to person and could be dictated by either economic necessity or desire – but regardless of why and when, there are financial benefits and costs involved.

So if you’re thinking about returning to the workplace, some of the main money points to consider are…

1. You’ll be earning a regular income – hooray!

The reality is that many households today require two incomes to make ends meet, and returning to work can help in shoring up your finances. In turn, this can give you more choice in terms of your living arrangements, holidays and children’s education.

2. You’ll be setting yourself up for future pay rises

Taking an extended break from the workforce not only cuts off your current income, it can also pause your career development and any associated salary increases. Returning to work ensures that your industry experience remains relevant and that your qualifications (and hopefully future salary) continue to grow.

3. You’ll be bolstering your retirement funds as well

In addition to your take-home pay, most employees also receive superannuation (at a current rate of nine per cent, rising to 12 per cent over the next few years). For a 30-year-old on an average income, the potential cost to her superannuation end-balance of taking five years out of the workforce is about $75,000.

4. There are lifestyle costs to consider

Whether it’s the cost of transport, getting a house cleaner or investing in more corporate-style clothing, the lifestyle costs of working can be several thousand dollars per year, after tax.

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5. You’ll need to factor in childcare costs

With average fees of about $80 to $100 per day, the cost of having a child or two in formal care can be a real barrier to work. The government does subsidise a significant portion of this cost via the Childcare Benefit and Childcare Rebate but the expense is still a significant consideration. See www.humanservices.gov.au for eligibility criteria.

6. You may lose family tax benefits

This only applies if your household is eligible for them in the first place, but if you are and are returning to work, this could trigger the loss of up to $4,400 per annum, per child of Family Tax Benefit A and $4,100 per annum, per child of Family Tax Benefit B. When you consider this along with childcare expenses and other costs of returning to work, it can seem almost not worthwhile! The government’s www.human services.gov.au website has a useful online estimator to help you work out the level of tax benefit you might be eligible for, based on your family income, so you can get a clearer picture.

One solution to the working situation is to work part time. Part-time work can ease the cost of childcare, reduce the loss of tax benefits and help provide a manageable work/life balance.
Whatever option you choose, whether it’s staying at home a while longer, reversing working roles with Dad, finding a part-time gig or diving into full-time work, assess your finances and make the decision that’s best for your individual situation.