How to Financially Prepare for Maternity and Paternity Leave

Preparing for the day your little one arrives can be a day of pure excitement and joy but can also be overwhelming in the details to prepare financially. There’s a great deal to think about when it comes to living comfortably on one wage and planning for your new addition and the costs involved.

Not only are you suddenly starting to think about the new costs involved in education and living expenses of a plus one, but there are also considerations to think about in terms of how to save during the maternity leave period and what entitlements you might be able to claim.

Here are some of the things to think about to have a solid financial plan in place.

One of the first things to do once you or your partner have announced the pregnancy is to have a conversation with your employer and HR advisor on your company benefits. There are a few options to consider including; annual leave, paid maternity leave, parental leave or perhaps even maternity leave at half pay.

As of July 1st this year, the new government changes for maternity and parental leave mean eligible employers can split their Parental Leave Pay so they can take it over two periods within two years. Employees can also claim PLP for 1 set period and one flexible period whereas previously, employees could only use PLP for one continuous 18-week period.

Additionally, there are changes for people adopting a child, with new measures in place to give adopted parents an extra two days of unpaid pre-adoption leave to attend any relevant interviews.

These parental leave entitlements can be taken when:

While employers in Australia need to abide by both Federal and State Government regulations, it’s worth noting your employer may have some different company policies in addition to the Government regulations.

Some employers are much more generous than others in this area, so it’s a good idea to find out exactly what you’re entitled to. As a general rule, you’ll need to have been employed for at least 12 months before claiming.

This varies greatly depending on your costs of living, income and financial goals. A few things to consider in your budget can include:

One of the most significant expenses in having a baby is medical expenses. Ultrasounds, birthing classes, vaccinations and regular check-ups are going to accumulate fast, and the quicker you include these into your costs, the faster you can save for them. 

Private health funds will have a waiting period before you claim, so working this into your budget well before pregnancy is a good idea.

Maternity leave is a good time if you have existing debts, like credit cards, personal loans or a home loan to pay them down as much as possible.  You may want to consider how you can reduce these debts as much as possible before the baby arrives, particularly as you may encounter some unexpected expenses along the way.

On top of making regular debt repayments, there are other things to consider that could help you manage debt.

It might be beneficial to think about:

While everyone’s goals are different, they all rely on short, medium- and long-term investment strategies to make them a reality. At Ironbark Wealth, we can provide you with genuine opportunities to invest and save for real growth during this new stage of your life.

Call us so we can help you financially plan for the next chapter of your family’s journey.

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