How To Prepare For An Unpaid Maternity Leave While In Debt -

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In 2015, a report was conducted that found 52.5% of women who take maternity leave do so without compensation. Without receiving compensation, women may have to choose between taking care of their newborns or returning back to work sooner. These choices can then lead to other factors that affect women such as postpartum depression, a decrease in breastfeeding rates and so forth. Are you part of the percentage of women who will be taking uncompensated maternity leave in the near future? I will be one of those women! Find out below what we are doing to prepare ourselves for unpaid maternity leave.

Our Journey

In just a few short months, we will be welcoming our second daughter into our family. This is an exciting time for us and our family. However, this change is going to have an impact on our personal finances. My spouse and I both have stable and full-time employment, but neither employer offers paid paternity leave. We have been working on different strategies to gain better control of our finances during this time of change.

My spouse will be returning back to work this month. This is much beneficial as we expect his income to double moving forward. He plans to continue to work during my maternity leave. I plan to continue to work until I go into labor or medically required to stop. I will, then, be taking a temporary leave of absence. During this temporary leave of absence, we will lose my income for a few short weeks.

We have found that having a good understanding of where we are financially has been helpful in preparing us for this next journey. While we know what to expect financially during the newborn stage, we have a big age gap between our children. This means that we will have to obtain many of the baby items we had previously sold years prior. Fortunately, I have a lot of friends and family who recently had babies. This means that they are also more than willing to pass their gently worn items our way.

Another great thing about having maternity leave during the summer means we will save money. We are saving money by not having to enroll our oldest child in camp or daycare as we both usually work. With this in mind, we will be saving quite a bit of money already! However, we still have to plan for our current monthly expenses.

Our Strategies

So far we have taken the following steps to aid us during my maternity leave.

Save, Save, Save

As soon as we found out we were expecting in November, we knew that I would be taking an unpaid maternity leave. Right away, we determined how much we would need to save to cover at least two months of the expenses that my Net Income covers. Once this amount was determined, we moved towards actionable steps to automate our savings. We realized that we wouldn’t be able to save the amount we needed with the number of pay periods we had left.

Luckily, we received a Tax Refund during tax time and used about half of this amount to put towards savings to cover our maternity leave. Had we not received a Tax Refund during this time, then we would have been more aggressive with our savings. We would have also been more aggressive in finding ways to reduce our expenses or earn more income.

Even with having the right amount of savings to cover our expenses during my maternity leave, this alone was not enough to satisfy my need to have financial security. We still have other strategies to help us become more secure during this temporary leave of absence.

Pay Down Debt

Our first priority to preparing for maternity leave was to build savings. Our second focus continues to be on paying down the amount of debt we have. Currently, our monthly debt payments account for 35% of our bring home pay. We realize that this is extremely high. Since we have begun focusing on this aspect, we have already paid off two credit cards ourselves. A third credit card has also been paid off thanks to a debt protection plan we had paid on the card.

We have about three more months before my maternity leave. We intend to pay off at least one more credit card and our car loan within this time frame. Having the car loan paid off will free up a couple hundred each month that will allow us to pay down our debt even more vigorously. Until then, we have been focusing on cutting down our expenses and finding ways to bring in extra income.

Pay expenses in advance

As mentioned previously, we are working hard to pay down some of our debt. We are also focusing on allocating some of our funding to pay for expenses in advance. Many of these expenses we are working to pay for in advance are baby-related items. Our strategy to ease the expense of diapers and wipes right away is to buy a package each pay period. We also combine this method with price shopping for the best value and utilizing coupons. We expect this to aid in the financial strain that can sometimes accompany and unpaid maternity leave.

As we move closer to our due date, we will be looking to buy household items in bulk and non-perishable food items. This will help ease our discretionary expenses during this time of income loss. We hope this will also prevent having to take unexpected shopping trips. Even with these strategies, we still expect unexpected things to arise. However, we can be more financially prepared for them when we do not have to budget for specific baby and household expenses that time at home.

Enrolling in Debt Protection

It is no secret that we will be taking maternity leave while also in debt. Previous strategies discussed stress the need for us to pay down as much debt as we can before we encounter maternity leave. So what about the debt that we can not pay off in time? Some credit cards offer debt protection or card security plan. With these plans, you pay a fee based on your account balance each month. When you encounter a life event that qualifies for benefit payments then you may file a claim. It is important to read the terms and conditions of these plans before authorizing your enrollment. There may be time requirements before you can file a claim for certain benefits.

We have found that paying for these plans has been beneficial for us in the past. These plans have paid our minimum balance all the way up to paying off our full balance depending on the length of each life event. We intend to utilize these plans during our maternity leave to help alleviate some of the debt payments while we are on a limited income. However, we also want to get out of debt so we may also keep paying on the cards while also receiving the benefit of an account credit. We recommend that you find everything out you can about these plans and also consult with a financial advisor before enrolling in these programs.

These are just a few things that we are doing to help prepare us for unpaid maternity leave while in debt. I also checked in with my HR department to find out how much sick time and personal time that can be utilized combined with my unpaid leave. I recommend checking with your HR department as well to find out what you might qualify for.

Other Options

Another strategy that we wish we could have utilized would be Short Term Disability Insurance. Some employers may have Short Term Disability Insurance to those employers. For those whose employers do not offer Short Term Disability Insurance, there is an assortment of private policies available. It is recommended to contact your Insurance Agent to find out more about these type of insurance policies. I would also keep in mind that many of these policies have fine print requiring specific time limits before the benefits can be taken care of. This means that these privately owned policies may benefit those planning to becoming pregnant versus those who are currently pregnant already.

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What are you doing to prepare for your unpaid maternity leave? Do you have different strategies that can be helpful?