By Jasmin Brown - Licensed Insolvency Trustee

BDO First Call Debt Solution

How to Plan for Your Maternity Leave

May 21, 2019 | 10:33 AM

The weeks and months before a new baby can be joyful and exciting, but also exhausting and a bit scary. Once maternity and/or parental leave begins, the last thing most parents want is to worry about is their financial situation. As you are planning your leave, it is important to consider the possibility of additional debt due to your reduced income. We have compiled some great online resources and debt advice that can help you avoid money worries during time away from work.

With Canada’s Employment Insurance maternity benefits, women receive 55 per cent of their usual income for up to 15 weeks. Both parents also have the option to share parental benefits for up to 69 weeks. In reality, taking time away from work sometimes compounds other financial issues that parents face. Existing debt obligations like credit card debt, a mortgage or a vehicle loan can affect your ability to make ends meet during maternity leave.

Preparation is key. Here are a few key things that parents should explore before maternity leave begins.

Do your research ahead of time. Make sure you have a clear understanding of your financial circumstances while you are off work. Your Employment Insurance benefits (EI) will differ depending on your situation (employed, self-employed, adoptive parents). You can find a more in-depth explanation of EI benefits on the Government of Canada website.

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You should also be aware of newer laws. In 2017, the federal government added a new benefit for those on maternity leave: the option to take 18 months off instead of 12 months. The lifestyle blog, Yummy Mummy Club, offers one viewpoint on this change in maternity leave benefits. It is a worthwhile read.

Talk to HR, seek out extra income and more. This article from Today’s Parent offers some great ideas for getting your financial house in order before your baby arrives. One is to make sure you understand your individual employer’s benefits by visiting your Human Resources department. Another is to find a source of side income that can help you keep up with debt payments and everyday expenses. One word of caution: if you are receiving Employment Insurance benefits, any extra income could result in the government clawing back a portion of your benefits. Make sure you understand exactly what happens to benefits if you are working while on claim.

Tackle your debt. If you have multiple forms of debt, it is best to make a plan for paying it off before your maternity leave. Is it possible to make a lump sum payment on the principal amount of one of your high-interest debts? Should you combine your debts into one monthly payment with a debt consolidation loan? A Licensed Insolvency Trustee (LIT), can advise you on all available debt solutions and help you find one that fits your situation.

Check out your local resources. Before your baby arrives, take some time to research local and provincial programs for parents to-be or parents of young children. Your provincial government website is a great starting point. You can also look for non-profit programs and services near you, like the YMCA and the Canadian Paediatric Society