While the Family and Medical Leave Act grants many parents up to 12 weeks of time off to spend at home with their new child, there is no guarantee that time will be paid. In fact, only 12 percent of private sector workers get a paid parental leave, according to the U.S. Department of Labor. Going weeks or even months without income can put a strain on any family’s budget. Here are seven ways to minimize the financial stress.
Make the most of your other benefits. Your workplace may not offer paid maternity leave, but your compensation package may include other benefits that could be helpful. Check to see if you have short-term disability insurance, says Tiffany Welka, vice president at VFG Associates in Livonia, Michigan. Not all disability insurance policies pay for maternity leave, but those that do may reimburse some or all of your lost income.
Flexible spending accounts can free up money for use elsewhere. While they won’t pay for leave time, they do allow workers to pay for child care and medical expenses with tax-free money.
Upgrade your insurance policies. If you don’t have disability insurance through work, buying an individual policy prior to getting pregnant is another way to get coverage. Some policies have exclusion periods, meaning you may have to wait before claiming benefits. Review the details carefully before making a purchase.
Reviewing health insurance coverage and switching to a more comprehensive policy can be another smart move prior to getting pregnant. “You never know what’s going to happen in that delivery room,” says Dr. Kecia Gaither, a maternal-fetal medicine specialist. “You might end up with a C-section that can be complicated.” An extended stay in the hospital may be expensive, but a good health insurance plan can reduce out-of-pocket costs.
Adjust your work schedule. Regardless of whether you are currently pregnant or planning to get pregnant, now may be the time to take on extra hours if you can snag overtime pay. Workers on a salary may want to rethink vacation plans or when they schedule doctor visits. Doing so can preserve personal time for use during a leave instead. After the baby arrives, finding freelance work or consulting could help lessen the financial strain of an unpaid maternity leave.
However, Lois Barth, a human development expert and author of “Courage to Sparkle”, advises setting reasonable expectations during and after a pregnancy. “What I see with my clients over and over again is that they don’t understand their capacity,” she says. The first trimester of pregnancy leaves many women exhausted, and those first sleep-deprived weeks with a newborn aren’t particularly conducive to work either.
Divert your savings. For those who can’t work more hours, Welka has a different suggestion. “If it’s hard to work overtime, reduce retirement contributions and put that extra in savings,” she says. It’s a simple way to grow an emergency fund prior to delivery. However, remember to restart your retirement contributions once you get back on the job.
Rethink the budget. Families dropping from dual incomes to a single income will undoubtedly have to trim their expenses. Everything from cable to coffee should be on the table when it comes to making cuts, and couples should have open and honest discussions about what’s important to them. “It always has to be with the backdrop of your existing priorities,” Barth say. She also recommends having this discussion as soon as possible. “The farther out you have for planning, the better,” she says.
Calculate your medical costs. While reshaping your budget, don’t forget to set aside enough to pay for your medical care.”I see a lot of unknown co-pays,” Welka says. “If you have to pay a co-pay every time [you see the doctor], that adds up.”
Take advantage of social services and freebies. Even when you take out the medical costs, babies can be expensive. “Most of your money is going to go toward formula and diapers,” Gaither says.
However, resources from diaper banks to brand loyalty programs can help families cut costs. While breastfeeding is the most economical way to nourish a baby, hospitals and pediatricians often have free formula samples to hand out to women who need or want to use formula. A number of companies and retailers – including Wal-Mart, Gerber and Target – have welcome kits for new mothers that also provide free samples and money-saving coupons for baby supplies.
Government programs such as WIC, SNAP and some state disability programs may be able to help women with food and other costs during an unpaid maternity leave. Community nonprofits may operate food banks, offer newborn layettes or provide other support to new mothers. Gaither recommends expectant and new mothers talk to the social services office at their hospital to learn more about what’s available in their area.
“Having children brings so much uncertainty,” Barth says. “It’s like uncertainty on steroids.” Nothing can completely alleviate all the unknown factors associated with a new baby, but these seven tips may bring some level of certainty to the uncertain world of unpaid maternity leaves.
