Brace yourself for the financial pitfalls of extended parental leave
Two years later, the dust has settled on the federal government’s decision to increase the length of maternity leave to 18 months from 12 months in an attempt to create more “woman-friendly” policies for working moms.
As a soon-to-be mother, on first pass, the extra time with baby seems fantastic. But because the program was rolled out without any additional funding to complement the additional length of maternity leave, the financial and career ramifications for women and their families can be severe.
If you’re in the market to take an extended 18-month leave, know the pitfalls, and do your best to mitigate them.
How it works: Firstly, birth moms and surrogates, can choose whether to take the 12- or 18-month option. In both circumstances, they are eligible for 15 weeks of maternity benefits, with federal Employment Insurance (EI) providing them with 55 per cent of their average weekly salary (up to a maximum $562 per week).
After those 15 weeks of maternity leave, any parent or caregiver (adoptive or birth, or the partner, regardless of gender) opting for the 12-month leave can take 35 additional weeks of parental leave. During that time, the government will provide 55 per cent of their average weekly earnings, up to $562 a week. Thus, the 12-month maternity leave amounts to $28,100 in benefits.
For those taking 18 months, the maternity benefits amount to nearly the same value; $28,987. Once those initial 15 weeks are up, and you switch over to parental benefits, the government will pay out 33 per cent of the average weekly salary, up to $337 per week, over 61 weeks.
The onus is on you to prepare financially for the dip in income:Taking the extended leave is like a slow and painful burn on your bank account. Thus, I cannot stress enough the importance of savings in advance and preparing an ultra frugal maternity-leave budget. When my fiancé and I found out we were expecting, for example, we started setting aside triple the amount of savings, immediately cut back on meals out, and we renegotiated our insurance plans; all in an effort to SAVE, SAVE, SAVE.
It can take a few weeks, and sometimes even months, to make changes to household spending such as cutting your cable, selling a car, switching your grocery buying habits and more; and that’s why the moment you find out you’re expecting, you need to begin preparing for major spending reductions.
Taking 18 months away from work is hard on your career, so stay relevant: Unless you work for an ultra-progressive woman-centric organization, it will be hard to catch up with colleagues who have advanced their skills, their job levels, and salaries while you were away. The best way to overcome this challenge is to stay relevant while you’re away.
Take free online courses (MOOCs — massive open online courses), post and comment on career-related articles on your social media (don’t just post cute baby photos), network while you’re off (yes, you’ll need to sort out a child-care solution for this), and potentially link up with a business coach who can help you channel your career energy so that you can be the best version of professional you when you return to work.
There’s no way to sugar coat this, if you’re short on cash, you work in an extremely competitive industry, or if you’re a business owner, you need to seriously consider going back to work earlier so that you won’t fall behind financially and with your career.