FINANCIAL PLANNING BEFORE YOUR BABY ARRIVES IS CRUCIAL
Ideally, you’ve gone on maternity leave only after working for at least the minimum 600 hours (about 15 weeks full-time) in the last 52 weeks or since your last Employment Insurance claim. This will ensure you receive the current maximum payment per week.
For many families, this means mom (and maybe dad later on) will be bringing in half of their previous income for a year unless they have a paid maternity leave or top up with their employer. In many cases, maternity leave benefits can be far less than half.
Budgeting for a new baby
Here are some ideas on how to budget for this change in your family’s finances.
You can download our FREE budget now to get you started!
- Plan ahead. If you’re pregnant, or just planning to get pregnant, now’s the time to go on a money diet and begin budgeting for a baby. Trim your budget and do your best to live off your projected maternity leave income. Save that unused income to provide you with a cushion during your mat leave, to cover some of the larger baby items, or to pay down debt. Don’t assume it will be easier to save more money when you’re not working, because you won’t be tempted by eating out or clothing or events. You’ll be just as tempted, if not more, by baby deal websites and the goods on display at your mall play dates.
- Make friends in the same boat. Join baby groups where the moms want to meet at each other’s houses, not the local play place. Arrange walking dates that don’t go past an expensive coffeehouse. Find friends that you can share meal planning ideas or coupons with, swap baby clothing with, and generally support you in sticking to your budget.
- Take a breather. If you’re finding it hard to make ends meet on the basics and you’re being honest with yourself that you’ve cut out the extras, start looking at your fixed costs. You may need to change your mortgage from Bi-weekly to monthly, eliminate your cell phone, cut back on the cable bill, sell unused items for cash, applying for a consolidation loan to ease interest headaches or putting a hold on RRSP payments. Some of these moves are truly for extreme cases only, and if you’re considering them, be sure you’re doing it for the right reasons – not because you’re in a cycle of spending on frivolities and then slashing important things like debt repayment.
- Bring in extra income. As noted in Part 1, if you work while you’re receiving parental benefits, you’re allowed to earn $75 per week or 40% of your weekly benefits, whichever is higher. If you’re earning the maximum of $447 per week, you can add an extra $178 in income each week without being penalized. Any income earned above that amount will be deducted dollar for dollar from your benefits for maternity while off the job. Please read 2018 updates here.
There are plenty of things you can do to earn extra income while on leave that don’t require you to pay for childcare.
You can look into babysitting, house cleaning, freelance work, consulting, working in a retail store that allows you to bring your kids to work with you, or another part-time job that fits around your spouse’s schedule or any free babysitters you might have (family, friends).