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Lots of parents are shocked at how little their maternity leave benefits will be. They think they’re entitled to a year off with full pay and for many that simply ain’t so.
Maternity benefits are payable to a birth mother for up to 15 weeks. After that, parental benefits kick in, which can be claimed by either parent and last for up to 35 weeks.
But here’s where the real kicker comes in. Employment Insurance pays 55% of your average insured income so the maximum you can get is about $460. If you don’t get a top-up at work, you’re going to have to learn to live on a lot less while you’re home with baby.
So how do you save for baby’s arrival?
Why not practice. Live on your maternity/parental leave income for the duration of the pregnancy. Put the rest away for emergencies, to buy the stuff you’ll need for baby, or to start an education savings plan. Since the first two weeks of mat leave are unpaid, having some extra money in the bank will come in very handy. And if you can’t swing living on less it for the months that you’re preggers, you might want to reconsider taking the full year’s mat leave.
The other thing to think about is which parent will take the most time with the baby. Traditionally, women have done this. But when the woman is the primary breadwinner in a family, the income loss to the family is felt doubly. Do the math to see who should take time off and how much, and how that will impact on your family’s financial situation.
The arrival of your newest family member should be a time full of joy and excitement. But you can’t expect things to run smoothly if you’re a dope and don’t do some planning. Put the nine months of pregnancy to good use growing a strong and healthy baby and also a big pool of cash to cope with the changes that are coming your way.
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