May 9, 2014 : Holly Duce – Guest Contributor
How to Plan for the Cost of Maternity Leave and Beyond
Ed note: Happy (almost) Mother’s Day! We wanted to focus on helping mothers-to-be this year, when it comes to planning major purchases for their little one’s arrival. Here are some things you should factor in when budgeting for maternity leave.
Preparing to become a mother for the first time can feel overwhelming, but with a little research and planning, you’ll feel more confident and equipped for your new life. Having your finances in order will allow you to enjoy your maternity leave and bond with your new bundle of joy.
The Family and Medical Leave Act of 1993 mandates that employers provide 12 weeks of unpaid job-protected leave to mothers of newborns—however, it is up to the employer to decide whether to provide paid benefits.
In order to be eligible for FMLA leave, an employee must have been at the business at least 12 months, and worked at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles.
Compensation and benefits vary from company to company. Whether your employer offers a full benefits package or none at all, you’ll need to consider a number of new expenses when building a budget for the first few months of your baby’s life.
You’ve already figured out how much you’ll need to cover your lost wages from maternity leave—now it’s time to budget for everything else. Here’s a guideline to help your calculations:
Nursery: A typical nursery includes a crib with mattress, a dresser/changing table with changing pad and bedding, a rocking chair and personal touches. There are lots of ways to save money while putting together the nursery, so don’t let it be a budget-buster!
Baby Food: You can save a bundle during the first year by breastfeeding. The average baby consumes 26 ounces of milk per day over the first year, so based on the average price of name-brand formula, formula feeding costs approximately $119 per month. Breastfeeding moms will need a breast pump, nursing bras, breast pads and nursing tops, which will run about $435 in the first year. That cost could be reduced by more than half if your health insurance covers the cost of a breast pump.
Diapers & Supplies: Disposable diapers average about $0.25 each and newborns typically use 8-10 per diapers per day, so plan on spending around $210 per month on diapers for the first three months. You can save money by using coupons or purchasing store brand diapers. Cloth diapering is another money-saving option to consider. The upfront cost is an investment that could save a pretty significant amount, especially if you plan on having more than one child. Be sure to factor in the added cost of laundering.
Baby Gear: An infant car seat is a necessity and should not be bought secondhand unless you can personally verify its age and crash history (it shouldn’t have been in ANY car crashes). Other items you may need or want include a portable crib, baby swing or bassinet. You can register for these items for a baby shower or pick them up at consignment stores to save money.
Clothing: Economize by accepting hand-me-downs and shopping at thrift stores, where you’ll often find like-new items for a fraction of the cost. You can also register for baby clothing and blankets.
Health Insurance: It’s important to find out your health insurance policy’s coverage for maternity care, including the birth. Research the cost of adding a child onto the policy, and the cost of newborn care including vaccinations, tests and procedures during the first few months of baby’s life.
Childcare: The cost of childcare varies greatly by region and type of care. This will likely be one of your biggest expenses. Options to decrease childcare costs include adjusting your work schedules to reduce the amount of time your child needs outside care. If you and your partner stagger your schedules, baby will have more time to spend at home with you, reducing childcare costs.
Sit down with your partner and go over all of your options. Use this list to map out your expenses. Discuss wants versus needs to come up with a realistic budget plan for your family. Having a financial plan in place will put your mind at ease so you can focus on the most exciting change in your life.