For moms-to-be, it’s possible to take maternity leave without breaking the bank.
Updated: 7 hours ago
Original article by:
Ritika Dubey
Toronto Star
May 11, 2024
📰 Read the FULL ARTICLE here.
I spoke with the Toronto Star about how expecting parents can prepare financially for maternity leave. Here are the highlights and my contributions.
Key Takeaways
Outside Quebec, Employment Insurance maternity and parental benefits cover either a 12- or 18-month leave, paying 55 per cent of earnings up to a weekly maximum.
Because of that cap, higher earners may receive far less than they expect, and choosing an 18-month leave spreads the same benefits over more weeks.
Self-employed parents and small business owners can access EI only if they opted in to the program ahead of time.
A realistic leave budget includes regular bills, everyday non-essentials and new baby costs like diapers, formula, a crib, car seat and stroller.
Saving gradually, starting as early as possible, makes the income gap much easier to manage.
My Perspective
Many expecting parents are surprised by how little EI actually pays once the weekly cap kicks in. Someone earning $100,000 a year, for example, won't receive anywhere near $55,000 over a 12-month leave.
"That's not going to cut it. That can be very scary for many people who have high expenses."
That's why I encourage parents-to-be to look closely at what they'll actually receive, along with any income from a partner, and work out whether personal savings will need to fill the gap. Build a full household budget, from dining out and monthly bills to everything the baby will need. As soon as you learn you're expecting, set up automatic monthly deposits into a high-interest savings account.
"Do it slowly over time as opposed to all at once in a mad dash at the last hour."
Not everyone has room to save for a leave while also covering housing and retirement. If that's you, take stock of your current assets and consider temporarily drawing on savings earmarked for other goals. You may not be able to do everything at once, and that's okay.
Originally published in the Toronto Star by Ritika Dubey on May 11, 2024. Use the link at the top of this post to read the full article.
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