Financial planning for maternity leave

 

Having a baby can be draining on the finances, especially when you go from 2 incomes to 1.  My income prior to going on maternity leave, was a significant proportion of our household finances, even working part time.  As all our

children were planned, this makes it easier to prepare for the financially tight times.  In the current economic climate, it even more important to stay on top of bills and day to day living.   Ideally financial planning should start the moment you plan for a baby.   Here is a list of tips that I did when preparing for our 3rd baby.

Write up and expenses and income book

Record all your income and expenses so that you can have an idea of how much you will require on a monthly basis in order to survive comfortably. Itemize your expenses. After recording this for a few months, you will be able to see where you can cut costs and where you cant, how much deficit you may be in and help prepare for that.  Identify needs vs wants. You can also see when bigger bills are due- like utilities, rates and car rego, and plan for those.

Cut monthly expenses where possible

Childcare- Prior to going on maternity leave, I was claiming the minimum child care benefit, as my income is variable and we didn’t want to owe anything.  When reducing our monthly expenses, we looked out our yearly income and started claiming the maximum childcare benefit- this reduced our weekly childcare out of pocket expense by about $40 (that’s an extra $160 per month in our pocket).

Insurance- ring around insurance companies and try to get a better deal.  We had been with the same insurance company for many years.  I got a much better quote for a similar product from another company and went back to the insurance company I was with to see if they could match it.  When they said no, I took my business elsewhere- then my original insurance company chased me and offered an even better quote.  Have a look at your insurance and see what you are covered for- you may be paying for cover that you don’t need.  We saved $60 per month on insurance by shopping around and we are still covered for what we need..

Credit cards, loans, etc.- whenever you get a bonus (government benefits, tax return, baby bonus etc) or overtime- put it towards paying off credit cards and loans.  Aim to have as much paid off before you stop work.  If you can pay off something completely-that’s one less regular monthly expense to pay.

Services- you may be connected to services such as internet, phone, electricity, sports clubs etc, that you may get a cheaper service elsewhere.  Shop around.

Groceries- buy no name brands, shop for veggies and meat at the end of the day/week when markdowns occur, make your own snacks, biscuits, museli bars etc.  Buy your favourites in bulk when they are on special.  Pack your lunch.  You can save heaps by not buying your lunch at work.

Save, Save, Save

We have a separate savings account that I regularly put money into and I had a saving goal prior to starting leave without pay.  This savings goal included 6months worth of our projected monthly deficit plus a bit extra for just in case.  You will need to calculate how much you need by the difference in your income and monthly expenses plus the amount of time you are expecting to have without pay. So far, we have been able to live off one income without having to dip into the savings, due to cutting expenses elsewhere.  Put a cash stash aside for specific big bills that are due when you are on lower pay.

Mortgage

Our aim was to pay off as much as we could from the mortgage, as a lower home loan meant lower monthly interest payments. We have a line of credit loan and pay off as much as we can on top of the monthly interest.  Every month the interest gets lower and more money goes toward the loan (expect when interest rates kept going up up up!).  only do this if all the other financial stuff is under control, as the savings on interest will be minimal.  Your mortgage provider might offer a ‘pregnant pause’ or a period of time where they can decrease your payments.

Plan your leave

I was fortunate enough to get maternity leave, annual leave and long service leave (pro rata).  Look into how much paid leave you may be entitled to.  Work unions might be able to help.

Christmas bonus

We got a large “Chrisco” delivery prior to Christmas.  We knew that I was going to be on leave over Christmas so we ordered meat hampers, freezer hampers and Christmas hampers that enabled us to host Christmas and reduced our grocery bills dramatically for about 3 months.  Instead of spending $800 per month (probably $1400 to host xmas), we are now spending $200 per month on groceries (mainly fruit and veg, cleaning items etc.).  I paid of the monthly payments with our tax return, as the monthly repayment would have continued into the time when I stopped getting paid.  We got treats that we wouldn’t have afforded otherwise.

Increase your income

When in the planning phases for pregnancy, you or your partner could look into overtime or a second job.  I was able to do extra shifts when I was pregnant and put this money into savings and on the house.  We sold stuff we didn’t need on ebay, did internet surveys for cash and voucher rewards, collected paid recyclables, every little bit helps.

Buy as much as you can while you are still getting paid

Get as much baby stuff as you need, a few boxes of nappies in different sizes (or cloth nappies if you prefer).  We chose cloth this time to decrease the ongoing costs.  We did some needed house maintenance.  Aim to prepare your home so that other bills might be reduced- we put up awnings on the windows on one side of the house to decrease our cooling costs, I made block-out curtains for other ‘hot’ windows.  We put in a rain water tank to decrease water bills- and help the River Murray in this horrible drought.

Don’t pay for services you can do yourself

Gardening, window cleaning, baby room decoration, hairdressing etc, may not have to be done by a professional. DIY and save.

 

Hope this helps.