Getting financially ready for maternity leave
As well as learning how to be a mum, there’s also significant financial pressure and considerations that come along with this stage of your life. For example, taking time off work and cutting back to one income or one-and-a-half incomes can be difficult to manage. So, how do you ensure that your family finances will stay on track whilst you can enjoy special quality time off with your baby without having to worry about rushing back to work before you feel ready?
I’m going to share with you five tips on how you can get financially ready for the arrival of your baby and how you can get through your maternity leave.
Tip #1 – Set up a maternity leave fund as soon as possible
So, as soon as you start trying to fall pregnant, or as soon as you find out that you are pregnant, set up a separate bank account where you can start contributing some savings that will help cover your time off work. Preferably this account will be an offset account linked to your mortgage, if you do have a home loan, but the key here is consistency. Consistent regular payments into this account will help you to build up this savings fund quickly and efficiently in preparation for your maternity leave.
I suggest you decide on the percentage of your income that you’re going to put into this fund each pay, and if you know how much time off you want, it’s easy to then work backwards to calculate how much money you need to save to ensure you can still have a comfortable life during your maternity leave. Obviously, the more you can save, the less pressure you have on yourself to return to work before you feel ready. You know, one example could be if you can try and save 50% of your personal income for the nine months leading up to your maternity leave. This will allow you to live comfortably for at least a further nine months of being completely unpaid once your maternity leave pay stops.
You’re going to have to learn to live on less income when you’re on maternity leave so you might as well start learning how to do that before you leave work and before the extra costs of nappies comes into the equation.
Tip #2 – Understand what you’re entitled to
It’s important to ask your employer if they offer any paid maternity leave because this can obviously contribute financially.
But you also want to investigate what government benefits you might be entitled to. Contact Centrelink and find out if you are entitled to any paid maternity leave and how much it will be. Also, ask them if you will be eligible for any family tax benefits, family tax A and B, or any parenting payments, or any other financial assistance following the birth of your child.
Tip #3 – It’s a great idea to review your current spending and cut back on your big expenses
Obviously, this is a big change to your life, and it’s important to review what you’re doing now, what’s working well for you, and what’s not. Also, review your mortgages and other debts to see if you can refinance them to cheaper facilities to save you money. It’s going be a lot harder for you to refinance once you’re on maternity leave, so I just suggest any review of your mortgage and your debts happens before you start maternity leave as soon as possible.
Review all your other day-to-day expenses and identify where you can start making savings to make room for the new expenses that will inevitably come with having a child.
Tip #4 – Steer your baby shower towards gifts that will be the long-term necessities
So, a gift registry at a baby shop is a really good idea to ensure that you get what you need rather than getting things that are not useful to you.
Suggest to your family and friends to combine their gift so they can get you the larger items that are more expensive like the cot or the pram that you need or maybe even a large supply of nappies rather than every one of them giving you smaller gifts that the baby will outgrow quickly.
Tip #5 – Most importantly, enjoy and embrace every moment
Hopefully by the time your baby arrives, you have a nice, healthy balance in your maternity leave fund account so that you can sit back and relax and really enjoy the precious gift that is motherhood.
I hope these tips have helped you!
Feel free to reach out to one of our friendly mortgage brokers who can help you to develop a plan to get you through this time.
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