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Maternity leave: How can I afford it?

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Maternity leave and adapting to parenthood can be exciting, but it can also be financially challenging. 

Pregnant employees have the right to take pregnancy leave for up to 17 weeks under federal law. Parental leave allows up to 61 or 63 weeks of unpaid time off work.

More than  2.3 million people took work off due to childbirth or adoption between 2012 and 2017.

Although some companies provide benefits during maternity leave, additional costs are to be expected.

Kristine Beese is the CEO and co-founder of Untangle Money, a finance company for women. 

She said around one-third of her clientele need financial advice on child planning and in vitro fertilization (IVF) funding. 

She shared her advice on preparing your finances for maternity leave. 

Photo by Mikhail Nilov

Preparing your finances

Beese said she recommends planning as early as possible. This includes understanding your finances and looking into the cost of childcare as well as potential saving methods. 

“Sometimes children show up unexpectedly. In that case, you’ll need to do a lot in a shorter period of time,” said Beese. 

She added if you know you want children in the future, there are many things you can do to prepare.

Beese said it’s important to understand your current financial situation.

How much money do you take home? How much do you spend on bills such as rent and utilities?

Find out how much money you need to save for retirement to maintain your current lifestyle. This ensures you are not behind when the time comes for retirement. 

Calculating how much you want to invest in your retirement helps parents understand their potential budget when having a child. 

Photo by Werner Pfennig

Beese said common mistakes include not understanding your financial position and falling behind on retirement savings. Funding an education also needs to be taken into account.

She also said  to look into the cost of childcare to set a goal regarding how much  to save.

According to the Financial Accountability Office of Ontario, the average cost of childcare in 2018 in Ontario was $12,800. 

Beese also recommended saving money during maternity leave and not just before having a child.

“Resist the temptation to spend lots of money on your new baby. There is an endless variety of things you can spend your money on when you have children,” she said. 

For example, buy second-hand items such as clothing and toys at a reduced cost.

Parents can also look into camps and activities provided by their cities or libraries at reasonable rates.

The City of Toronto provides camps and recreational programs for children. The City of Ottawa also provides virtual and outdoor physical activity programs.  

“Learn how to find a cheaper alternative to get the best of both worlds,” said Beese. “Do the activity you want while saving money that you can then allocate to something else.”

One of the biggest financial mistakes people make is not taking advantage of government programs, according to Beese.

For example, the Canada child benefit is a tax-free monthly payment eligible for children under 18. 

Photo by Julia M Cameron

Financial literacy

Elke Rubachis the president of the Rubach Wealth management firm. 

She said not looking into finances before making a major life decision can lead to even more significant financial oversights. 

“People make financial decisions with a very short term view…instead of thinking about how it affects them [longterm],” she said.

She added that she believes financial illiteracy is the source of people’s financial mistakes. 

Financial literacy is the ability to understand and use financial skills, according to the Ontario Ministry of Education. That includes personal finance and business finance. 

A 2018 MNP LTD survey found more than 94 per cent of Canadians believe the financial literacy curriculum needs improvement. 

One in five respondents said they would have a better grasp of their finances with better education. 

Rubach said parents need to teach their children financial literacy to ensure a more financially stable future. 

“Kids think that money grows [on trees]. As soon as possible, parents, [teach] financial literacy to your children,” she said.

The Ontario Ministry of Education provides financial information parents can use to provide financial literacy education to their children. 

Rubach said parents can achieve their goals by looking into how much money they have and how much they need.

“Everything is doable if you plan for it. There are no unreasonable goals, just a reasonable timeline,” she said.

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