How to Manage Your Money During Maternity Leave
When you begin to plan and have a family, you may be worried about how you are going to make ends meet when you are out on maternity. It can be even more complicated if you decide that you want your spouse to take paternity leave as well. While you do need to take time to recover after the birth of a baby, you may be struggling with how you will continue to pay your bills and manage to be at home, especially if you plan on going back to work after having the baby.
Get on Your Post Baby Budget Now
Before you have the baby, it is a good idea to work out what your budget will be after the baby. If you are planning on going back to work, you will have to pay some sort of childcare bill during that time.
You can make sure that you can manage everything by sticking to that budget now. Take the extra money you would be paying to childcare and put it into a savings account.
You can use this money to live off while you are on maternity leave. If you start at the beginning of the pregnancy, you will have to close to what you need for your maternity leave, if not enough all together.
- Plan for childcare expenses.
- Build up your emergency fund.
- If you plan on quitting, put the second income straight into savings instead of using it.
Consider Short-Term Disability Insurance
Some short-term disability insurance plans will cover maternity leave for a set period of time. This insurance can also cover you if you are put on bed rest during your pregnancy.
The biggest catch to this insurance is that you need to have it in place before you get pregnant. Your policy may even have a waiting period that will affect how soon it will cover something like a pregnancy, which most insurance companies consider a planned event.
- Your job may offer short-term disability plans.
- Consider shopping around for one if you do not have the plan offered through work.
- Read the policy carefully, you may be required to return to work after maternity leave to take advantage of the benefits.
Save Up Vacation and Sick Time
Although fitting in one more vacation with your spouse before you have the baby sounds appealing, you may want to save up the vacation days and sick days to cover your maternity leave. This is one of the easiest options to cover at least a portion of your maternity time.
However, it likely will not be enough, especially if you plan on taking the full three months of leave. You may have your husband save up and take paternity leave after your maternity leave so you can wait to put your child in daycare until he is three months old.
- Check on your company's policy for saving up sick days and vacation days. Some companies may limit the amount of vacation you can claim.
- Taking paternity and maternity leave at different times will maximize the amount of time you can have a parent home with your child.
- If you are quitting, your job may give you a lump sum since you are paid out for unused sick and vacation days.
Plan for Other Expenses
In addition to replacing your missing income, you can need to plan for extra expenses that you did not plan for. Your medical costs may go up or you may realize that you need more diapers than you originally thought. It helps to have extra money on hand the first few months after you have a baby.
You can buy some things second hand, but not everything. You may want to plan ahead and make freezer meals to help you the first few weeks when you are overwhelmed and too tired to cook. Your body will need time to recover from having a baby even if you do not have a c-section.
You should plan on not having the normal amount of energy during this time. A menu plan for the first month can really help you save on eating out. However, if you plan you may be able to budget in some convenience items like paying for grocery delivery or for maid services the first month that you are home.
- The cost of baby items will add up quickly. Diapers and formula can be very expensive, so look for coupons and try switching brands to find the best deal possible.
- Consider things like life insurance and the added cost of adding your child to your health insurance policy.
- If possible, start saving for your child's education now.
Look for Ways to Make Money During Maternity Lave
You may be too tired to do much during maternity leave, but if you need to make money and you do not have any sick time or short-term disability insurance, you may want to look for additional ways to bring home money. Options include babysitting at home or working as a freelance contractor. Be sure you give yourself enough time to rest though.
- Temporary work from home jobs can be a great option.
- Consider selling some items if money is really tight.