Expecting a baby? If you’re going to take parental leave, make sure you’ve planned ahead.
In the U.S., maternity leave and paternity leave are often unpaid. Depending on your job, you’ll likely to be able to take some time away from work to care for your new baby, but unless you work at Netflix or another tech company, your paychecks probably won’t be rolling in the door for a long period of time. For the most part, you’re on your own.
That income gap can be scary, but some financial planning can make the transition easier.
Kim Tran of the blog Becoming Everything is expecting a little one this fall, and she recently shared her plan for surviving maternity leave without major financial fretting.
Planning + Saving = Peace of Mind
Tran explains her maternity leave is mostly unpaid. Stowed-away paid time off and short-term disability will cover a portion of her regular income, but her take-home pay will be far from the amount she normally uses to maintain her budget.
Upon learning of her pregnancy, Tran started adjusting her savings plan. Where she would usually make a double payment on her student loans, she’s scaled back to making the minimum payment.
That “extra” $335 in her account? It’s not going toward baby’s needs just yet — it’s sitting in savings until she needs it to make up the difference in her income during her maternity leave. Tran will sock away $2,000 before her due date in November from this adjustment alone.
There’s also a bit of estimation in her savings plan. Tran isn’t just basing her numbers on the bare-minimum bills — she’s also expecting her family’s utility bills to increase. Tran anticipates a utility bill inflation increase over the upcoming winter, and she’s also expecting usage to increase.
Think about it: Being at home every day with a new baby in the winter? Add in a steady stream of visiting family? Yep, those bills are going to go up.
By anticipating the increase in her utility bills, Tran is better able to save and plan for financial comfort all winter long.
Visit Becoming Everything to study Tran’s entire maternity savings plan.
Your Turn: Have you recently taken parental leave? How did you prepare for the change in your family’s finances?
Lisa Rowan is a writer, editor, and podcaster living in Washington, D.C.