How do we budget when one of us goes on parental leave?
Map your household income for every stage of the leave, then check the bills still fit at the lowest point. For a child born or adopted from 1 July 2026, families can get up to 130 days (26 weeks) of government Parental Leave Pay, which is taxable and is paid at a set daily rate. The usual squeeze comes after it runs out, during unpaid leave, so a leave fund saved before the baby arrives does most of the heavy lifting.
The short version
- Parental Leave Pay leaves Hannah and Luke $650 a fortnight after bills, but unpaid leave leaves them $1,000 a fortnight short.
- Putting aside $345 a fortnight for 20 fortnights builds a $6,900 leave fund that covers six fortnights of unpaid leave.
- For children born or adopted from 1 July 2025, the ATO pays a super contribution on your Parental Leave Pay, based on the super guarantee rate. It's paid automatically into your fund after the financial year ends, so you don't need to claim it.
You're excited, you're tired already, and somewhere in the back of your mind is a quiet worry: how do the bills get paid when one of you stops earning a full wage for months?
It's a fair worry. Income doesn't drop once, it changes several times: employer leave, then government pay, maybe some unpaid time, then a part-time return. Seeing each stage on paper turns a vague dread into a number you can plan for.
What the government pays from 1 July 2026
Parental Leave Pay is a government payment through Services Australia. This is general information only, so check the details for your family on the Services Australia pages linked below.
- Days: for a child born or adopted from 1 July 2026, your family can get 130 days of Parental Leave Pay. That's 26 weeks based on a 5 day work week. It was 120 days for children born or adopted from 1 July 2025.
- Rate: when we checked on 16 October 2026, Services Australia's rate page still showed the 2025-26 rate of $189.62 a day before tax, or $948.10 per 5 day week, and had not yet listed a 2026-27 figure. The rate usually changes on 1 July each year, and the rate you get depends on the financial year you take the leave, so check the page for the figure that applies to your days.
- Tax: Parental Leave Pay is a taxable payment, so plan on the after-tax amount.
- Partners: if you're partnered, some days are reserved and there's a limit on how many days you can both take at the same time. For children born or adopted from 1 July 2026, Services Australia lists 20 reserved days, and from 1 July 2025 you can take up to 20 days at the same time.
- Eligibility: there are rules about who can claim, including a work test. Services Australia can tell you whether you qualify.
Step one: map every stage of the leave
Write down each stage, how many fortnights it lasts, and what each of you will take home. A typical pattern looks like this, but yours may be in a different order or overlap.
- Employer paid parental leave, if your workplace offers it. Moneysmart suggests checking what your employer offers and whether you can take it at half pay to stretch it out.
- Government Parental Leave Pay.
- Unpaid leave. Under the Fair Work rules, employees can take up to 12 months of unpaid parental leave, and can request up to 12 more.
- Return to work, often part-time at first.
Also check whether your employer pays super during paid or unpaid leave. Moneysmart flags this as something to ask about, because it varies.
Step two: see where the bills stop fitting
Once you have each stage in fortnights, put your shared bills underneath. The stage where income drops below bills is the one to plan for.
Worked example
Hannah and Luke's income through leave
Example only. Hannah and Luke live in Ballarat. Normally Hannah takes home $2,900 a fortnight and Luke $2,100. Shared bills are $3,100 a fortnight and they split them by income share. On Parental Leave Pay Hannah gets $1,896.20 a fortnight before tax ($948.10 x 2, the latest rate Services Australia lists) and they pencil in $1,650 after tax as an estimate. These are example figures.
| Step | Sum | Result |
|---|---|---|
| Normal household take-home | $2,900 + $2,100 | $5,000 a fortnight |
| Hannah's normal share of bills | $3,100 x ($2,900 / $5,000) = $3,100 x 58% | $1,798 |
| Household take-home on Parental Leave Pay | $1,650 + $2,100 | $3,750 a fortnight |
| Left after bills on Parental Leave Pay | $3,750 - $3,100 | $650 a fortnight |
| Household take-home on unpaid leave | $0 + $2,100 | $2,100 a fortnight |
| Shortfall on unpaid leave | $3,100 - $2,100 | $1,000 a fortnight short |
Parental Leave Pay leaves Hannah and Luke $650 a fortnight after bills, but unpaid leave leaves them $1,000 a fortnight short.
The $1,650 after-tax figure is an estimate. Actual tax on Parental Leave Pay depends on your total income for the year.
Hannah and Luke can manage Parental Leave Pay, but money is tight. Unpaid leave is the real gap. That's very common, and it's much easier to fix before the baby arrives than after.
Step three: re-do the split so it stays fair
If you normally split bills by income share, the split needs to change when one income drops. Leaving it at the old percentages means the person on leave is paying most of their small income into bills while also doing the night feeds.
- Income share: recalculate the percentages from the new take-home pay. In the example, Hannah drops from 58% to 44% of household income during Parental Leave Pay.
- Equal money left over: some couples decide that during leave, both people should end up with the same spending money, whoever earns it. This often feels fairest when one person is doing unpaid care.
- Pause the extras: joint savings or extra loan repayments can be paused during leave and restarted on return.
Step four: size and build a leave fund
A leave fund is a sinking fund for the gap. Work out the shortfall each fortnight during the tightest stage, multiply by the number of fortnights, and spread that over the pays you have left before leave starts.
Worked example
sizing Hannah and Luke's leave fund
Example only. Hannah plans 6 fortnights of unpaid leave after Parental Leave Pay ends. They want her to keep $150 a fortnight of fun money. They have 20 fortnights of pay left before leave starts.
| Step | Sum | Result |
|---|---|---|
| Shortfall each unpaid fortnight | $1,000 + $150 fun money | $1,150 |
| Total needed for unpaid leave | $1,150 x 6 fortnights | $6,900 |
| Saved over the pays left | $6,900 / 20 fortnights | $345 a fortnight |
Putting aside $345 a fortnight for 20 fortnights builds a $6,900 leave fund that covers six fortnights of unpaid leave.
Example figures only. Your stages, amounts and timing will be different.
If $345 a fortnight isn't possible, shorten the gap instead. Options include a shorter period of unpaid leave, the partner taking some leave later, or returning part-time sooner. There's no right answer, only the one that suits your family.
Don't forget the irregular costs
Babies come with their own sinking funds: car seat, pram, nappies, and possibly childcare later. Add them to your list of yearly costs. If childcare is part of your return to work plan, check the Child Care Subsidy information on Services Australia before you lock in days, because the gap fee can be a big new bill.
Key numbers
| What | Figure and source |
|---|---|
| PLP days for children born or adopted from 1 July 2026 | 130 days (26 weeks) Services Australia |
| PLP days from 1 July 2025 | 120 days (24 weeks) Services Australia |
| PLP rate listed on Services Australia (page updated 1 April 2026, shown as 2025-26) | $189.62 a day, $948.10 per 5 day week, before tax Services Australia |
| PLP rate indexation timing | Usually changes 1 July Services Australia |
| PLP is taxable | Taxable payment Services Australia |
| Reserved days for children born or adopted from 1 July 2026 | 20 days Services Australia |
Free official help
- Services Australia: How much Parental Leave Pay you can get
Current rate, number of days, reserved days and super on Parental Leave Pay. - Services Australia: More Parental Leave Pay days from 1 July 2026
The change to 130 days for children born or adopted from 1 July 2026. - Services Australia: Who can get Parental Leave Pay
Eligibility, including the work test. - Moneysmart: Having a baby
Baby budget tips and questions to ask your employer. - Fair Work: Parental leave
Your unpaid parental leave entitlements and return to work rights.
Questions people ask
How many weeks of Parental Leave Pay can we get?
For a child born or adopted from 1 July 2026, families can get 130 days, which is 26 weeks based on a 5 day work week. Check Services Australia for how the days are shared between partners.
Is Parental Leave Pay taxed?
Yes. Services Australia says it's a taxable payment, so budget on the after-tax amount.
Do I get super on Parental Leave Pay?
For children born or adopted from 1 July 2025, the ATO pays a super contribution on Parental Leave Pay, based on the super guarantee rate. It's paid into your fund automatically after the financial year ends.
Should we change how we split bills during leave?
Most couples do. Recalculating by the new income share, or aiming for equal money left over, stops the person on leave paying most of a small income into bills.
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Keep reading
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- All couples and families guides
Sources
- How much Parental Leave Pay you can get, Services Australia. https://www.servicesaustralia.gov.au/how-much-parental-leave-pay-you-can-get, accessed 2026-10-16.
- More Parental Leave Pay days from 1 July 2026, Services Australia. https://www.servicesaustralia.gov.au/more-parental-leave-pay-days-from-1-july-2026, accessed 2026-10-16.
- Who can get Parental Leave Pay, Services Australia. https://www.servicesaustralia.gov.au/who-can-get-parental-leave-pay, accessed 2026-10-16.
- Having a baby, Moneysmart. https://moneysmart.gov.au/family-and-relationships/having-a-baby, accessed 2026-10-16.
- Parental leave, Fair Work Ombudsman. https://www.fairwork.gov.au/leave/maternity-and-parental-leave, accessed 2026-10-16.