Baby on a Budget – Part 2
Posted by Christi | Filed under Christi
Again, I need to make this clear – NO, I AM NOT PREGNANT. One month ago I began my Baby on a Budget series of blog posts where I work towards being a Money Savvy Momma. I went to work and created a maternity leave budget to explore what life would be like with a little one. I left off with an unbalanced budget, and have been humming and hawing ever since.
My husband and I do not want to find ourselves in debt after a year of mat leave. We work hard to keep our credit cards clear. We know we can make it work, but the question is how?
In our situation, we must increase our income during mat leave. We have explored a few possibilities:
1. Save up ahead of time
The idea itself is great! We begin saving now, to create a reserve fund for later, from which we will pull a monthly payment to top up our income during mat leave. Right now we are beginning home improvements. We put money away for them every month, and have built up a nice savings account (that will likely disappear very quickly once the major renos begin). We are also putting money away for other annual expenses like gifts, and saving for emergencies. In all honesty, I don’t want to pull money away from these areas right now to begin saving for mat leave. (Hey, I don’t have kids yet, I’m still allowed to be selfish with my money). So we’ve pushed this idea aside for now.
2. Alex stays home with baby
After the initial 15 weeks of maternity leave, either my husband Alex or I can take parental leave for 35 more weeks. If I stayed home for those 35 weeks, I would continue to receive EI benefits. However Alex would receive 95% of his salary if he were to take parental leave. This means that we wouldn’t have a budget shortfall. Is it an option? Yes. Would it work? Yes. Is this the route we’re going to go? … We don’t know. There are so many unknown variables like breastfeeding, and mommy being away from baby, that we feel it’s best to “wait and see.” We’re lucky to have this option available to us.
3. Alex works overtime
Since my last Baby on a Budget blog post, Alex has been approached by his employer to begin working overtime. Alex is on a special project that will continue for years to come, and overtime is being offered in abundance. The best part is, Alex doesn’t mind and he gets to do his overtime from home.
As a solution to our baby budget shortfall, Alex could work overtime once baby arrives. However, we have a feeling that he might be a tad bit exhausted, or I will be, and won’t want him working overtime. So overtime with a little one may not be the best solution.
Our Solution for Now
What we can do is save up his overtime in advance. We calculated our anticipated budget shortfall, multiplied that by 12 months, and that will be our Baby Budget savings goal. (We will still have our emergency savings as we know we can’t plan for everything). Coincidentally, with Alex working the minimum overtime hours, it will take 9 months to reach our savings goal. So maybe we have a little fun with the overtime money now, and then once I actually am pregnant, we start saving that money to draw from during mat leave.
We decided on this together; a little of idea one, and a little of idea three. It’s been interesting to have these conversations with my husband even before we have kids. I feel good about it. The nicest part is that our Baby Budget is finally balanced on paper.
Mommies and Daddies, did you pre-plan your mat leave? I’d like to hear about your experience, or perhaps learn about some of the unexpected things that can come up financially in the first year of baby’s life. Please fill me in!
Thanks for following along. Have a fun and safe Canada Day long weekend!
- Christi (@ChristiPosner)