Maternity leave can be a bittersweet topic for young families. If you are employed but aren't going to receive an EI top up from your employer, then you need to make sure that you can afford to only receive about half your pay. Many young couples struggle with this. It often results in families using credit to stay home or returning to work sooner than they'd hoped. Preparing for an upcoming maternity leave can be really stressful, so I've decided to share my journey and how I managed to stay home from work for one full year with only half of my traditional pay check.
I knew that having basically half my pay would not allow me to be home for a year. Unless I planned very carefully, I would be back to the grind in just a few short months. In my town, it was hard to find people who could care for a small infant, but I REALLY felt that it was important to be at home with my baby for as long as possible. So, with some careful planning, I was able to save and prepare to be financially secure once my baby arrived.
I thought I had a little bit of time on my hands, but sometimes babies have their own agenda!! My sweet bundle of joy arrived two weeks early!! This meant that I missed out on an entire pay check that I was relying on. On top of that, EI takes a minimum of two weeks to begin. Two weeks! If you don't get top up from your employer, like me, that's two weeks with no income. Unless you've saved, that is.
My first step was to make a budget of our current family expenses to see where we would fall short given I would receive half my pay. I looked at all our expenses and determined that if I could save $400 per month for my entire pregnancy, then I would have accumulated enough money to probably make it through a year of maternity leave. I factored in birthdays, holidays and also wanted to make sure I had a little extra for emergencies. All in all, $400 per month would do it.
There's an old adage that if you want to save more you either have to earn more or spend less. While preparing for my leave, I did both. At the time I was on shift work, so I worked as many extra shifts as I could, including every statutory holiday as these paid time and a half. I also worked a second job and was able to get as many shifts there as my pregnant self could handle.
I am a girl who loves anything to do with points. It's like free money! If you have to shop, why not make your money work for you?!! I cashed in credit card points to get gas gift cards, I saved my favourite pharmacy points for makeup and toiletries, and I hoarded every gift card I received during my pregnancy. This helped out more than I anticipated and I would do it again in a heartbeat - especially the gas gift cards.
Now, was it all glorious? Was my budget accurate? Of course not … My air conditioner broke, and so did my car, fridge, and furnace - all around the same time. Good news is .. I had the savings to manage these crises and I didn't have to rack up debt. However, I was able to reduce expenses as well. I called my car insurance company, my cable provider and my phone provider and negotiated better deals which helped us save even more cash. I also didn't hesitate to explain that I was about to be off for a year on EI benefits with a baby, as I figured there was no harm in explaining why I was being such a tough negotiator. My husband and I benefited even more as we had an opportunity to re-negotiate our mortgage a few months early, which was right before my due date. We got a much better rate compared to the previous one and that freed up some more cash.
I'm not saying my plan was perfect; there were unforeseen events but it was essential that we looked at our finances to see what we could do without or work harder for. For us, my plan helped manage the household emergencies, participate in gift giving and enjoy the year without incurring unmanageable debt. It allowed me to focus on being a new mom, which is the important part.
Lisa’s 6 steps to maternity leave security:
1 Review all expenses and see what adjustments have to be made with just half an income
2 See where you can cut costs/earn more money
3 Establish what you have to save during pregnancy .... and save, save, save !
4 Renegotiate expenses where you can
5 Use points!
6 Enjoy your new arrival and spend your savings!
If you can reduce the money worries, then the time spent planning your maternity leave finances will benefit both you and baby.