Most expectant parents soon realize that their financial plans will shift significantly with the news that a little one is on the way, but there are financial steps you need to take beyond your budget to ensure a financially stress-free maternity leave.
Clarify your maternity policy
According to the the 1993 Family and Medical Leave Act, new moms who have worked at their current employer for at least one year, and at a company with at least 50 employees, are legally entitled to 12 weeks of time off after having a baby. However, your employer isn’t required to pay you a dime for that time. Check with your human resources department to understand if you’ll receive any payments over maternity leave, and to determine how short-term disability, family leave, and vacation days can supplement your income while you’re out.
Clarify the policy around time out of the office for medical appointments, or medically mandated bed rest or work limitations early in the game, too. When you near your due date, you’ll see the doctor at least once a week. If you’re employer requires you to take a half day for that time, for example, you’ll quickly whittle into the paid time off you’ve planned to apply to your leave.
Save six months’ worth of expenses
It’s far more exciting to focus on funding new baby gear and nursery décor, but stick to budget basics: Save! Financial advisor John J. Fiorito of RMR Wealth Management, LLC says expectant moms should have a minimum of six months (ideally, 12 months), worth of their salary in a savings account (not investments), before baby arrives.
Not only will this “float you” through unpaid bouts of maternity leave, it ultimately means you’ll have a cushion for unforeseen medical emergencies, childcare–and, even, job loss. Determine the exact figure that you’ll need to cover at least six months worth of your paycheck, and establish an interest bearing savings account that you can’t dip into easily.
Online savings provider Smarty Pig pays 1% APY on deposits, requires no minimum balance fees, and allows you to name your savings goal and target goal amount, so you can monitor your progress. It also allows others to contribute to your savings in the form of gift cards—which are ultimately far more valuable than receiving everything off of that baby registry!
Know your medical coverage
Understanding where your medical insurance is accepted, what is covered and what it limits, and whether you must satisfy a deductible before coverage begins is a top priority the moment you hear you’re expecting. Dennis Walker of Intermountain Financial Group says that a basic, healthy birth usually costs about $10,000 in medical expenses, without insurance coverage.
Aim to save at least $250 a month to cover medical bills for your prenatal treatment leading up to the birth, as well as for delivery and your hospital stay. Understand exactly how long your insurance provider will allow you to stay in the hospital (some limit it to less than 48 hours), and clarify whether the “clock” starts ticking at the time you’re admitted (the labor process can span an entire day or more), or when baby is actually born. Additionally, the services of a lactation consultant and/or medical supplies used to support baby’s feeding (such as breast shields and breast pumps), may not be covered by your insurance at all. Before you accept any such device from the nurse, ask!