canadiandebtgirl

Saving Up for Maternity Leave

In Uncategorized on October 11, 2009 at 8:00 am

It would be wonderful if I had a job that provided a maternity leave top-up, but currently where I work they do not offer any top-up. I’ve come to understand that this is the norm and most people seem to make do without getting much income while on their maternity leave. I presume most people are not in debt when they have kids? I am sort of at a loss to how this will work for us unless we save a big nest egg for my Mat Leave. I would be able to take my leave, but I would only be bringing in the usual EI income.

The way it works is Maternity Benefits cover the mother for 15 weeks. After this time, Parental Benefits come into effect and cover the parent for a maximum of 35 weeks. This is a total of 50 weeks of EI coverage. The other 2 weeks come from your minimum vacation time per year, which I assume should be paid by your employer when you leave, or however you negotiate it since you do pay into it all year. Typically, since there is a two week wait for Maternity Benefits to come in from EI your vacation pay-out should help balance it out.

Hubby DOES have top-up, but since he can’t be the one who actually gives birth, I will still need to take time off work. But since he can take parental leave, he will take 4 months with top-up, and I will take 8 with no top-up.

This means we have to plan for the parental leave. 8 months of savings will be needed. I’ve done all the calculations so I know how much we need to save in order to take time off to have a child. Here is what I’ve come up with so far. If you see any loopholes or things I have not thought of, please let me know.

My items that need to be covered while on Mat Leave:
My half of housing costs:
My debt repayment amount:
My car and insurance:
My student loan payments:

My income that would be coming from while on Mat Leave:
The amount received from EI benefits (55% of salary, to a max of $447 a week minus taxes – I subtracted 22%, but maybe this should be more? If anyone knows the net amount that comes in per month in Ontario, it would be so helpful with my planning!)
Child Tax Benefit (which is pretty measly, in my opinion)
Universal Child Care Benefit (a taxable amount of $100/month)

Essentially, I calculated we need to save $12,046 to cover off my usual expenses for 8 months. If Hubby could cover the entire housing costs, we would only need to save $6,756!

We will need to discuss how this will work for us.

And hey, maybe by that time next year I won’t even need to worry about this because I’ll have a job with Mat Leave top-up and the amount needed to save will be much, much less.

How do people afford to have kids?

My calculations don’t even cover any of the extra things we’d need to consider with raising a child or having a baby in the house. Things like cloth diapers, any extra food, and clothing.

My plan is to have most things already purchased (or acquired is more like it!) prior to going on leave so they can be worked into the usual budget. Things like baby furniture seem kind of silly to me since so many people give this stuff away on sites like Freecycle and sell old (but still in new condition) furniture on Kijiji. Plus we’ll get a lot of hand-me-downs from the family too. I don’t think we’ll spend a lot on furnishings or the nursery. The main costs will be cloth diapers (I am 100% firm on this) and clothes.

Maybe I am totally unrealistic? Anyone care to share their thoughts on my plan?

Another motivation for getting to debt free: if I had no debt repayment amount, we would only need to save $6,045 and I would still be contributing my share of the housing costs! For me, motivation to repay debt comes from tangible milestones in my life. For example, being able to have a baby without worrying about my debt payments. Or being able to contribute more money to my RRSPs so that our retirement can consist of travel and freedom to not be worried about part-time jobs. Or living in a house that is 100% our own.

One day. 😉

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  1. I was on EI for a few months in Ontario – in fact, I just started my new job last week! I received the max amount of $447/week, which worked out to $786 every two weeks (or $393/week). I hope this helps! Good luck with everything!

  2. In the U.S., we don’t have govt. subsidized (paid) maternity leave. It’s up to an individual’s employer to decide their maternity policy. Larger corporations have the Family Medical Leave Act which guarantees that an employer cannot replace you while you’re out on leave.

    Maternity leave here in the U.S. typically means taking short-term disability (6 weeks for labor/delivery) and then any time off above and beyond is either vacation time, sick time, or unpaid leave.

    I took 8 weeks off when I had my son (6 weeks short-term disability – 60% of my income even though I had an unplanned c-section + 1 week vacation time + 1 week unpaid). In order to afford it, I worked a second job leading up to my delivery(doing freelance graphic work) to supplement my income and I worked at my regular job passed my due date, right up until delivery!!

    I planned ahead buying as much as I could by way of clothing, supplies, diapers, etc… (I don’t have much family and my parents are deceased). We bought a lot second-hand (craigslist, ebay, second-hand stores, garage sales, etc…) and I did a lot of planning! I made list upon list of what I truly needed and bought things a little at a time (as I could afford to!)

    Hope that helps!

    Judy@cutest-little-things.blogspot.com

    • That does help. It always re-surprises me every time I learn of all the difference in social welfare between Canada and the US.

      I should consider myself lucky to even have the choice of taking more time off with a little one.

      My main concern right now really is to pay off my debt. If I could pay that off before a little one arrives, we would have a lot less worries financially during parental leave.

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