Preparing for Unpaid Maternity Leave

Baby is coming. Before I know it, the scent of fall will be in the air, the leaves will have dropped from the trees, and we will be welcoming home the second little human being we created. It’s thrilling to picture the scene in my mind, and chilling at the same time to feel the responsibility of caring for another human being on our shoulders. We waited four years to add to our family because our finances couldn’t bear the burden of two children in daycare or one of us staying home — it’s the cold reality of $200,000 in student loans. Another cold reality is that I do not have paid maternity leave, so we will be without my income for a time. We were fiscally responsible in spacing out our children, and now we need to be fiscally responsible in preparing for the newest family member’s arrival. To that end, we are relying mostly on second-hand baby gear and clothes. We carefully weighed our health insurance options with labor and delivery at a hospital in mind. Mr. Stapler got a new job, which not only comes with a big raise but also allows him to work from home. The last piece of the puzzle is planning for the huge financial gap my maternity leave with create in our budget.

I do not have paid maternity leave.

It’s a scenario all self-employed moms face: What will our family do without my income? How much time should I take off of work at the expense (literally!) of our family savings account? As with all things financial in the Stapler household, we crunched the numbers.

How much time do I want to take off for maternity leave?

Sometimes you never know the answer to this until you’re in the middle of your leave. For me, I felt a mixture of wanting to interact with humans who could speak and taking a bathroom break whenever I wanted to, with a good dose of not wanting to leave my baby’s care to anyone else because no one else is his mother. It just so happens that Baby Stapler’s arrival is just in time for our firm’s typical slowdown for the holidays, so I won’t feel as though I’m leaving clients in the lurch or missing opportunities to attract new clients. I have hearings scheduled for mid-January, which gives me a natural returning point. That gives me about two months of maternity leave.

How much money do we need during maternity leave? 

MONTHLY EXPENSES:  Some of our expenses will be lower during maternity leave. I can draw up a budget that looks somewhat like the budget I established after getting laid off. One big cost savings comes from not commuting, therefore saving on gas and parking. That saves us about $250 in transportation costs alone. If finances are tight, we can reduce Little Stapler’s days at daycare, but last year’s change in his schedule prompted a lot of unexpected behavioral changes (primarily, bedwetting). The little guy will be going through enough changes with the arrival of his little brother, and if I’m only on leave for two months, it doesn’t seem worth it to disrupt a predictable part of his life. ONE-TIME EXPENSES: For those of you with co-insurance or high deductibles, you should estimate the approximate healthcare costs you will incur if you’re delivering at a hospital. Our maximum out of pocket for hospital delivery is $650. I expect I’ll be in the hospital for three days, so it would be wise to plan for paying $1,950 for my hospital. I’m unclear whether this also covers the baby’s costs or if we will have to pony up for further expenses. We are considering hiring a doula. Our doula during Little Stapler’s birth was invaluable. But she was expensive! At $800 – $1200, we have to budget for this expense.

Will our income during maternity leave be enough? 

Subtract your maternity budget’s bottom line expenses from your expected income during leave — your partner’s income, passive income (eg, rents on income properties), etc. — and you have your answer. With Mr. Stapler’s new income, we will fall short by $500 per month, plus the $1,550 in one-time expenses.

If not, where will we get the money we need to make ends meet?

It looks like Mr. Stapler’s new job has come in the nick of time. I anticipate having an additional $2,000 in our September and October budgets, so we should be able to easily save the necessary $2,500. Even better, however, was the moment Mr. Stapler asked me how much to withhold from his new paycheck. I plugged in our year-to-date numbers into the IRS’s withholding calculator and realized that he can have my taxes withheld from his paycheck, too. By having it go straight to Uncle Sam, we won’t have to pay estimated quarterly taxes (not that I was doing it anyway), and we can use the $3,700 I had been saving for taxes to fund my maternity leave! You may be thinking, “but you only need $2,500.” Can you guess where the rest of it — all $1,200 — will go? 😉 I promised Mr. Stapler that I would wait until we received his paycheck before I dumped it into a student loan. {Image by papaija2008 via FreeDigitalPhotos.net}