Finding out you are pregnant is an exciting time. There’s much to look forward, and while most of it is pretty darn fun (nursery essentials, baby clothes, a growing baby bump.) there are many serious things to start organizing too. If you’re a working gal, planning for your maternity leave should start the moment you see that big positive sign. All women will take at least 4-6 weeks off from work, and many up to 6 months. Needless to say, there is some major financial planning that goes into taking your maternity leave! No new mama wants to worry about having the money to pay bills, so start preparing your finances early with these tips.
1. Research Maternity Leave Laws In Your Home State
Knowledge is power, and especially so when it comes to knowing the laws that outline your state’s maternity leave. Despite each state and employer having their own laws about paid portions of your leave, the Feds have outlined that all employees are entitled to 12 weeks of unpaid, job-protected leave to care for the birth of a newborn or adopted child. You are required to have the same pay when you return as well. Aside from having three months of job protection, individual states also have additional time they may allow for job-protected leave, as well as wage replacement programs like state paid disability. It’s your responsibility to know what you’re entitled to, especially since it could determine how long you can afford to be off work.
2. Reduce Expenses Now
Despite your maternity leave only being a small amount of time (big picture wise), the arrival of your baby is really the signal that everything is about to change for your budget. You will now have to account for doctor co-pays, diapers, clothes and many other items you don’t currently spend money on. Expenses for your child will only grow as they do, so now is as good as any to take a look at your expenses and start reducing them. Stop paying for things you don’t use, like gym memberships or those extra 150 cable TV channels. Get in the habit of eating at home, and meal planning to stop wasting money on food you end up throwing away. Your peace of mind will be so worth it when you have just one paycheck coming in!
3. Start Saving
Just because your maternity leave doesn’t start for 6 months, doesn’t mean you should wait to prepare financially. Begin saving money from every paycheck and from those reduced expenses. It’s tempting to take those savings and spend them on other things you need, but you never know what your maternity leave may hold for you. You could have a difficult delivery that involves extra time in the hospital, a sick baby, or a spouse that loses their job. None of these things are things you really want to think about, but they should be planned for. Ideally, you should save enough money to mimic your paycheck while you are on leave, and then some. It may sound impossible, but with careful planning and the reduction of your expenses, you can do it!
4. Investigate Your Medical Insurance
Depending on your employer and state laws, your medical insurance can change while on maternity leave so it’s important to know your coverage. For example, my employer offered up to 6 months of unpaid maternity leave with job protection. However, my medical insurance was only covered for 4 months, after which I would have to pay Cobra to keep my coverage. Cobra was going to cost me $1,000 per month! That was a make or break deal for me, and I’m so glad I knew that going in. It’s also important to know the enrollment period for adding your new baby. You do not want to miss adding your child to your insurance, because paying out of pocket expenses for a newborn will definitely mean a hit to your budget.
5. Live By Your New Budget
Don’t wait for your bundle of joy to arrive to start creating and living by your new budget. “When the baby is here” is not a good mantra to have to jump into when you’re sleep-deprived. Good habits only take a month to set in stone, so take charge of your finances and make a budget that’s doable. You and your spouse should stick as close as possible to your new budget, and make adjustments before the baby arrives so you can live affordably.
6. Try To Pay Off Debt
Do you have a lingering credit card payment or just a little left on a car loan? Consider paying off any small debts to reduce your monthly expenses and give your budget some wiggle room. You will have less liability to worry about and your budget will be in better shape. I realize this is not an option for everyone, but it’s definitely something to consider. Even paying off a small debt that’s $700 can mean the difference in $50 every month. That’s a big pack of diapers, if you didn’t know!
7. Meal Plan
Why am I talking about cooking and food on a finance post? Because I’ve had a newborn and let me tell you- no zombie-mom even wants to THINK about cooking meals in the first few weeks of maternity leave. Well-intentioned family and friends will help out by providing meals the first two weeks, but after that you are usually on your own. Costs for constantly getting take out will add up fast, and are double or even triple what it would cost to make a visit to the grocery store. Do yourself a favor and plan out meals well before your due date, even taking time to stock your freezer with meals that already put together and just require heating. Don’t waste your hard earned and saved money on a $20 pizza!