As I mentioned when we announced that we were expecting a baby earlier this year, I am taking a 15 month maternity leave. Now almost 2 months into it (as of writing) I wanted to share how it is going financially and how we planned for it.
I want to call out at the top that we saved up a very long time for this amount as having kids was a priority for us. It took us over 4 years to save this kind of money before we had Ava. How the “Baby Fund” was funded varied over the years. Sometimes it was my overtime, sometimes it was part of our budget and sometimes it was Scott’s pay when we thought he was going to be out of a job. Either way it was something we knew we wanted to do in order to help reduce the amount of financial stress during one of the most stressful times in our lives.
Also note that this is above and beyond what we saved for diapers, formula and baby gear. This was 100% to support our income while on maternity leave.
Why Am I Doing this?
I’m going to get real with you. I just wanted to. I could explain why daycare might be easier to find at 15 months or how my recent promotion at work makes it easy to come back to a new role vs an old role. But I just wanted to spend another summer with my child. Without debt I have options to do this. We can choose to take a temporary hit to my salary and career goals and spend an extra summer with my daughter while she is 1+ year old and (hopefully) super fun. Not sure if we will be able to do this should we have another child but we wanted to take advantage of this opportunity now.
Maternity Leave Support:
We are very privileged to be able to do this. I know that many people are not and I know that this is not something that most people are able to do. I do want to acknowledge that we had advantages that got us to this point. Mainly being stable jobs, an ability to work overtime and get paid for it and low expenses. We are fortunate to be able to get support from the government for maternity leave and parental leave but that isn’t enough to carry the household bills. I have heard from so many people that what we get from the government is never enough and it isn’t going to cover 100% of what you make. But you can either decide to cut your expenses or save up (or both). We wanted to save as we felt it was the less stressful option.
How it will work:
For 13 months I will get some type of payment from either the government or my company in form of a top up or vacation time. The remaining 2 months will be self-funded. As primary breadwinner we knew taking a massive hit to my income was going to make a big difference in our overall lifestyle so we wanted to minimize that as much as possible. That’s where the savings come in.
My Pay Covers a Lot of Bills:
Increasingly women are becoming the breadwinners and/or contributing to the household with larger salaries. This is no different for us. We had spent a year living off of just my pay because Scott had temporary job issues early this year. My pay was covering our most important bills, mortgage, insurance etc. While we are grateful to be getting support from the government as well as company top up that money didn’t come in right away. Even though for the first month in theory I wouldn’t have a hit to my salary the reality is that I needed savings to cover the shortfall. As I write this I still have not gotten any top up from my company and it will be paid out later. Having the money set aside means we aren’t defaulting on our mortgage.
We didn’t actually change much to our budget that my pay supports. Starting in July we finally incorporated Scott’s pay back into our budget after having putting it aside for 1 year. Last year it helped to fund a car as well as the baby fund. This year now that it is back in our budget we are using it towards RESP, RRSP and saving up for other spending like our west coast vacation that we want to take in mid-2018. We only cut out about 100 dollars so relatively speaking we are living the same lifestyle as we did pre-Ava but with far less sleep.
While I am at home and at least for the first little bit I am spending a lot less. While I can still order stuff online, gas for my car has gone way down. We spent less in July than we have in any other month in the last 4.5 years. Which happens when you don’t go out much I guess. I know as I get more mobile I will be spending a little bit more however for now we are taking advantage of it.
I get paid monthly. Every month we transferred over the amount of my pay to cover off the bills. Any government or company support goes right back into that account to build it back up again. For some reason we thought it was going to be more complicated than it is to do the actual transfer. But we just transfer the money into the different line items on our spreadsheet and move on.
Now we have 10 months of savings with 13 months left to go based on the income I know I’m getting from the government. As I mentioned we haven’t received money from my company yet so we will keep an eye on this. I also negotiated with work that I could come back early if I either wanted to. Since we track and budget to the penny we are able to get an idea if we will run out of money sooner and will make the call early next year. It’s not ideal but again not defaulting on our mortgage to spend an extra summer with the pay when I can go back to a good paying job.
Baby Fund = Less Stress
Having a baby has been amazing but it isn’t without its challenges. It’s super hard to be responsible to keep another human being alive. One that cannot effectively communicate. When I’m having a rough day it’s amazing to have Scott bring me home Starbucks without us worrying. Having money set aside allows us to focus on Ava and each other. That alone has been very helpful to reduce our stress and make this naturally rocky period an enjoyable one.
Have you recently had a child? How did you manage the drop in income? Did you plan for your leave?
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