How to Financially Prepare for Maternity Leave

Maternity leave is tricky in the United States because it looks different for everyone based on what your job is and what your company offers. There is no federal-mandated maternity leave, which means you’ll need to plan early and well. Occasionally, your maternity leave is just yourself taking a break from a business you own. Money can make what could be a joyful (if exhausting) time more stressful. That’s why it’s so important to financially prepare for maternity leave.

Know your maternity leave policy

If you want to financially prepare for maternity leave, the first step is understanding your leave policy. It’s impossible to accurately plan unless you know how much pay you’ll have, how long of a leave period you have, and if your company offers any extra benefits. Look into things like the Family Medical Leave Act (FMLA) and make sure you know what your rights are as a pregnant person. (This is just an aside, but make sure you let your employer know in writing that you’re pregnant and document everything.)  

If you own your own business, figure out how much leave you’re hoping to take and what your business will look like while you’re gone. Do you have employees who can handle things? Do you have income coming in regardless (like if you own a blog)? Think about what’s realistic for you because it’s probably not going back to work immediately.

Get a whole picture of your finances

In order to know what you need for your maternity leave, you have to have an accurate picture of your financial situation. This means looking at your savings, expenses, and debt. Write down every bill that’s going to need to be paid while you’re on leave – both your fixed expenses like rent and your variable expenses like groceries. Knowing your starting point can help you figure out how much you’ll need to save and what your budget will look like while you’re on leave.

Create your maternity leave budget

Once you know what your financial situation is and will be, you’ll want to create a lean maternity leave budget. If you’re getting a full paycheck, this might be easier. But if you’re getting a reduced paycheck or no pay at all, your budget is going to be crucial.

When it comes to your variable expenses, you’ll need to create a realistic number. Personally, I’m a big fan of overestimating rather than underestimating. It’s better for your budget to be a pleasant surprise than a bad shock because something costs more than you budgeted. To get an accurate picture, save your receipts for a month and add up your actual spending. Then, budget a little extra.

When you’re creating a budget, don’t forget about the new baby expenses that are going to come up. I’ve created a list of monthly baby expenses for you! It includes things like feeding supplies, diapers/wipes, and clothes. Look up prices and know roughly how much everything is going to cost. Then, you can add those items to your maternity leave budget (and your budget beyond maternity leave).

Start saving!

No matter what your maternity budget looks like, the crux to financially preparing for maternity leave is saving as much money as you can. Not only for maternity leave but for those extra items that no one gifts you. But now that you have all the information you need, you can come up with the amount you’ll need to save. This number might look a little scary but don’t forget you have roughly ten months. Set up a dedicated bank account just for maternity leave and set up for money to automatically go into this account every paycheck. That’ll be helpful for hitting that number.

If you’re looking at that number and you’re like, “No way,” then you’ll need to figure out a way to reduce expenses or increase income (without pushing yourself too much). Look at how much you’re eating out, any subscriptions you don’t use or won’t use while pregnant, and the places you’re overspending. You have all of your receipts now, so take a harder look. Where are you spending that you don’t need to be?

You might need to find a way to bring in additional income during this time. This might include some extra shifts (depending on your or your partner’s job), some freelance work, a side job, or spending more time on your business. Just don’t forget to be kind to your body. It’s doing a lot of work right now, and it needs rest too. If you’re the one working more, discuss everything with your partner if you have one. Hopefully, they can take on more work around the house, so you have less on your plate. Put any extra you do make right into your dedicated savings account.

Don’t forget healthcare costs

If you want to financially prepare for maternity leave, you’ll need to factor in healthcare costs, both prenatal care and hospital costs. My mother likes to joke that they didn’t own me until I was three because they had to pay off the hospital bill. In the United States, especially, the bill for having a baby in a hospital can be extensive. This is even more true if your baby ends up needing some time in the NICU.

So, make sure you talk to your health insurance company and find out what they’re going to cover. Your OB/GYN might do this for you. Mine provided a pamphlet that spelled out what my deductible was and how much we were going to need to cover. But even so, I would call your insurance company yourself so you understand everything. Check with your company, too, because you might be able to set up a Health Savings Account (HSA) or Flexible Spending Account (FSA) to help with saving money for this specifically.

Work directly with your partner

This is step one for working together as a team when the baby comes. If you’re a single mom, this might not apply to you, but if you do have a partner, that open communication is going to be crucial. You both have to understand the budget and agree on the plan. Work together to make sure you’re reducing expenses and saving money. If your partner isn’t on board, it’s going to make things harder, so if you’re more of the money person, you might need to spell it out for them.

The newborn stage comes with a lot of challenges, from mom anxiety to lack of sleep. It also comes with a lot of joy, and you want to be able to focus on that. If you can avoid stressing about money, then everything will go a lot more smoothly. Do what you can to financially prepare for maternity leave. The key to starting early, keeping track of your financial situation, and being proactive. You’ve got this.

Drop your questions below!