Introduction
The scariest part of becoming a parent is facing the problem of how to plan and the cost of raising a child. What’s worse? Going on an unpaid paternity or maternity leave.
Don’t fret yet.
In this article, we’ll be providing you with actionable financial planning tips that would make going on a work leave less of a hassle. While the best tip would be to get a family-friendly job, there are other ways to maximize your leave.
Let’s get down to the tips right away!
Get a Family-Friendly Job
There are jobs that provide special benefits for workers who’s just given birth to a child or nursing a kid. Some of these provisions may range from flexible work hours and child care support to paid parental leaves.
If you’re wondering how to find family-friendly jobs, we have some useful tips in our article below.
Maximize State Benefits
Find out if your state offer welfare packages for parents and check your eligibility. Some states like California, New Jersey, Washington, and New York also provide extra paid leave options.
All these handouts from the government can go a long way in helping you get through your parental leave period without breaking their bank.
For more information about state policies surrounding parental leaves, read the The Family and Leave Acts (FMLA).
Adjust Your Budget
With the new arrival to the family, it’s important to adjust your family’s budget accordingly. This process is even more important during your paternal leave to reduce the effect of salary losses on your finances.
Some of the areas where you can cut costs include groceries, entertainment, and sometimes insurance. You can also adopt some money saving tips such as cooking more, shopping discount sales, and buying only what you need.
Additionally, you can review your insurance policy to slash any umbrella policies you find unnecessary.
Useful Budgeting Tools: NerdWallet’s Monthly Budget Calculator
Start Saving Early
Saving early is one of the best ways to prepare for your maternity or paternity leave. This tip is even more crucial if your employer does not offer any parental leave benefits.
One good option for saving money is to use the extra money from adjusting your budget, which we’ve discussed earlier.
In addition you can try these tips when saving for your parental leave:
● spend with cash,
● remove your credit card as a means of online payment,
● start an automated savings plan, and
● open a high-yield savings account.
When choosing the right high-yield savings account for parental leave, a good interest rate and security is the utmost priority.
Here are some of the best options available:
➔ EverBank Performance℠ Savings
➔ Bread Savings™ High-Yield Savings Account
➔ Bask Interest Savings Account
➔ Synchrony Bank High Yield Savings
Consider Getting a Short-Term Disability Insurance
A short-term disability insurance can act as a replacement for your salary during your parental leave. This insurance type can cover 50% to 100% of your salary, depending on the policy of the insurance company you choose. Also, typical coverage period is during pregnancy and recovery.
However, it’s important to note that you’re required to enroll before becoming pregnant to qualify to use a short-term disability insurance. The reason for this is that pregnancies are a preexisting condition for this policy.
There are some instances where your employer might provide a short-term disability insurance as an employee benefit. Ensure to check with your employer if such arrangement is available, if not, you should get one yourself.
Talk to Your Employer
Communicate with your employer to see if there is anything they can do to help your situation. Maintaining open and honest communication with your boss during and after your pregnancy can also help you find a common ground. Also, you should let your employer know your plans so they can find a way to accommodate you and your needs during the period.
For example, you can request for a modified work schedule or temporary adjustments to your employment requirements. This approach can be beneficial to you most especially if you’re going through any pregnancy-related discomfort.
Borrow Money
While some parents might not like this approach, sometimes, you might not have a choice. If you’re unable to save, get an insurance, or negotiate a deal with your employer, then borrowing can be an ideal option before you get back to work.
Here are some borrowing options you might consider:
● Personal Loans: Personal loans are a good option if you want to take a loan for your paternal leave because they offer better rates compared to credit cards.
● Retirement Funds: The SECURE Act of the United States in 2019, makes it possible for new parents to remove up to $5000 each from their 401K without incurring any penalties. This is not really a loan as you are not required to pay back the amount you withdraw. The funds will be removed from your retirement account.
● Family and Friends: Most times, the arrival of a newborn into a family is a thing of joy for everyone involved, including friends and extended family. Family members and close acquaintances can offer their support for the newborn(s) or you can request for assistance from them. This will help cover some of the cost required to get through the period.
Bottom Line
Parenting doesn’t have to come with financial stress and we at Play & Prosper aim to help you achieve that. With the tips mentioned in these article, you should be able to navigate your parental leave with ease.