With only about half of all American companies offering paid maternity leave, the decision to take time off of work to spend with your new baby can be a difficult one for many women.
A recent study conducted by the Society for Human Resource Management (SHRM) and Oxford Economics looked at three types of paid leave, including parental leave for both women and men.
The survey of 1,000 HR representatives found that only 55% of participating companies offer paid maternity leave to new moms.
Of that percentage, the study found that only 68% of female employees were even eligible for the benefit. This means that a large swath of new moms are left to figure out for themselves how they can afford to stay home with their newborns.
The U.S. Department of Agriculture estimates that it costs $233,610 to raise a child from birth to 18, which is why financial planning is so essential for women planning to be moms — especially when determining how to make ends meet while on maternity leave from a job. Keeping in mind that it costs about $12,980 annually to raise a child.
Here are some things to think about when creating a budget for your maternity leave:
- Leave period The Family and Medical Leave Act requires employers with more than 50 employees to offer workers 12 workweeks of unpaid leave in one year for the birth and care of a newborn child. This is in addition to whatever a company may provide in terms of paid leave. While companies like Citigroup and Facebook offer 16 weeks of paid leave, other companies offer much less or nothing at all. Be sure to check your state laws as California and New York have paid family leave. You may also choose to use your paid vacation time or your company's short-term disability plan. Check with human resources to understand exactly how it works according to your company's policy.
- Current expenses Once you know how long you plan to be on maternity leave — and how much of that time will include no paycheck — then it's time to get a realistic idea of what you spend every month and if those expenses will continue after the baby arrives. For example, do you still plan to buy your favorite latte every day? Will you continue with all your streaming services? Will you cut your lawn or stick with the lawn service?
- New expenses It's estimated that newborns go through 8 to 12 diapers a day. If you choose not to breastfeed or other circumstances require you to use formula, newborns take in about two to three ounces per feeding, and they eat every three to four hours. These are just two of the new expenses you need to consider in addition to pediatrician visits, clothes, and baby equipment.
- Emergencies Life can be unpredictable, so you need to have a fund to protect you against unexpected costs like a leaking roof, car troubles, or a sick pet. Most experts recommend you have three to six months of basic living expenses in your emergency fund.
- Think creatively The PennyHoarder website says that small changes can add up: a store brand of dog food instead of the premium brand, cutting the cable cord; and using Facebook to find second-hand baby clothes or equipment. You may also offer some simple services that earn a bit of extra income before the baby arrives, such as freelance writing or dog walking.
- Helpful apps CNET recommends apps like Personal Capital, You Need a Budget, PocketGuard, Mint and Goodbudget. Such apps offer budget monitoring and help you set goals and pay bills on time.