Budgeting for Maternity Leave


By: Joanna Muir

There’s a lot to think about when you’re expecting your first and I can understand how financial planning may take a back seat to car seats, cribs and diapers!

One is filled with decisions to contemplate, things to learn and looming responsibilities. Knowing how this huge life change will impact your household finances can make for an easier sleep – a valuable commodity!

Planning for the Baby takes two budgets:

1.Preparing for the Baby

2.After the Baby Arrives – Maternity Leave

Preparing for the Baby

Setting up the nursery is part of the fun and can be simple or elaborate. As well as a place to sleep there are clothes, a stroller, a car seat and endless other baby products. Consider other expenses and one-time costs to setting up your life and home to welcome your child. Friends who have had children are often more than happy to share their experiences and wisdom.

Depending on how much you choose to prepare, these purchases can add-up VERY quickly. There are stores and websites that sell everything you need, stores that you’ve never noticed before. Understand what impact the baby will have on your savings and budget and decide how you will spend:

  • Decide what you need and make a list: Mark items as ‘Needs’, ‘Nice-to-Haves’ or ‘Wants’
  • Do a little research: What does it cost new? What does is cost used?
  • What can you afford?

Have you got the savings to buy these items or the room in your budget to pay for them now?

Decide how you will spend and this becomes Budget#1 – Preparing for the Baby.

After the Baby Arrives – Maternity Leave

The next step is to understand the impact of the baby on your Household Finances.

Set up

Start with household income. For most new parents, household income changes a fair bit when one person takes maternity leave – usually the female but not always. A birth mother is eligible for maternity leave benefits and new parents may receive parental leave benefits. The combination of the two may provide benefits for up to 50 weeks and the payments are based on a proportion of previous work hours and salary, maxing out at $411 per week. And there are eligibility conditions.

Some employers provide additional benefits but not very many. If you do not have this information yet, now is a good time to seek it out. Speak to your employer’s human resources, look on-line to the government website and figure out exactly what this will mean in your situation.

This can be a substantial reduction to your income but don’t forget that there may be reduced expenses by staying home as opposed to going to work such as new work clothes or dry cleaning.  Work through your current expenses reviewing what will stay the same or change. New expenses may include diapers, formula, increased caffeine intake, a community centre membership and education savings. We changed our eating habits as time becomes precious. Ordering in was always tempting but a quick way to burn through the budget. We learned to limit this to once a week or once every couple weeks.

Planning for the financial impact this lifestyle change will have on your household makes up Budget #2 – After the Baby Arrives – Maternity Leave.

It may seem daunting but getting the facts and putting a little thought into a plan now will put you in the driver’s seat to make these decisions and alleviate some of the anxiety around major life changes.

What are you doing to prepare for the arrival of your baby?

When Joanna Muir was a child her favourite toy was a cash register that she bought with her own money. Upon completing university, Joanna found a natural fit working for one of Canada’s major banks. Becoming a CGA marked another milestone and working in the airline and healthcare industries broadened Joanna’s business planning experience.

She would be behind in planning for her retirement if it wasn’t for a moment in her twenties when she tested a retirement calculator and learned that she needed to be putting away a lot of money now to retire the way she wanted. With that motivation behind her, she started learning about loans and mortgages and bought her first home at twenty-four and hasn’t looked back. You can connect with Joanna at DearPiggyBank.com.

*Image: Shutterstock


  1. 1

    Contrary to what most people think, Canada doesn’t have maternity leave benefits for all mothers. It’s true that “A birth mother is eligible for maternity leave benefits” — but only if she has adequately paid in. A self-employed mother gets no benefits and thus has to plan long in advance, saving her own money if she wants an income during her time off. For example, when I had my first child I was self-employed and did not pay into the federal program, so I took about 5 months off because I’d saved enough to have an income during that time.

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