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How to Prepare for Maternity/Parental Leave Part 2: Financial Readiness

This is Part 2 of a 4 part series that you can read on your own or attend an Online 1 hour Workshop with similar information. Email ruthysiemens@gmail.com to register for the next monthly workshop!


Part 2: Financial Readiness: Cost of raising children.

Part 3: RESP Planning


I think it is a very big adjustment period, adjusting to living on less money while you are on maternity/parental leave in addition to the lack of sleep and emotional roller coaster of being a new parent.




So how can you prepare ahead of time for this loss of income?


Do you have any Debt?

Take the next couple months to intentionally put any extra money that you can on your:

  • student loan debt

  • credit card debt

  • line of credit debt

  • make additional mortgage prepayments, especially if you have a high interest rate


Many people don't know where to start when it comes to paying off debt.

Do we start with what makes sense mathematically or what motivates us behaviourally?


There are basically two methods: The Debt Snowball or Debt Avalanche and here is a great description of the differences.



Budgeting:

Paying off debt, and living on a lower income requires budgeting!

You cannot make a budget and then not track or follow it. You have to make your budget and keep tracking it each month and adjust for changes.

There are many methods of budgeting whether that's using

  • Pen and paper

  • Apps: Mint, YNAB, Pocketguard, Monarch Money etc

  • Spreadsheets

  • Cash Envelopes


If you have tried budgeting in the past and failed then now might be the time to look at Financial Coaching and getting the tools, resources and accountability that you need. Just like getting serious about losing weight requires a fitness coach, budgeting requires the same focus and coaching. There is no shame in needing help! Check out my financial coaching services.


Emergency Fund:

If you do not have any debt, Hooray! way to Go!


Do you have emergency fund in case stuff happens?

Stuff like injuries, vehicle repairs, illness, sudden job loss or payment for extra paramedical therapies.


While you are paying off debt and saving for your emergency fund, use the rest of your budget to practice living like you will while on Maternity/Parental Leave so that it won't be such a shock to the financial system when you go on leave

That means the rest of your expenses should be less than your $668 or your $401/week (not counting your significant other's income).



How much do Babies cost in the First Year?

This is a great question and there is a great tool out there that includes all those costs and adds them up for you.


How much do children cost?

Discuss your priorities for your children and your family, with your significant other ahead of time.


Do you value or prioritize sports, music, arts, family time, fancy toys, vacations?

You can't do it all! but you can prioritize!

Money is finite so you have to decide on your priorities. Of course, you don't know what kind of interests or hobbies your children will end up preferring, but it is important to decide what you are willing to spend and how far you are willing to travel for those opportunities.


For example, are you willing to spend every weekend travelling or staying in hotels for sports and eating out in restaurants?

Are you willing to pay for music lessons?

Are you willing to pay for the latest and greatest toys or technology or recreational vehicles like quads or bikes?

How much are you willing to pay for your children's Post Secondary Education?

Does one parent stay at home or do both parents need/want to work?


Now Go and Be Intentional with your Financial Readiness Plan!


The next question leads into Part 3: RESP planning!


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