Preparing for a pregnant pause {in your monthly income}

(Income) minus (Expenses) should equal a positive number. It doesn’t take a rocket scientist to figure out that calculation, but this needs to be your number one priority if you don’t want any more sleepless nights worrying about how you’ll pay your bills while you’re on maternity leave. You’ll have enough of those after the baby arrives.

Step 1

Assess your current situation, or in other words, determine your current expenses. A great exercise is to ask for receipts any time you spend money and record them in a spending journal for the next 30 days.

Step 2

Write down the sources of income you’ll receive while you’re on maternity leave. That might include short term disability, any accrued vacation or sick days, etc. Add up these amounts.

Step 3

Subtract your expenses from your sources of income. If that number is negative, you’ll need to make that number up with savings. Keep in mind: If you’re on maternity leave for 12 weeks, you’ll have to make up the difference in cash flow for those entire 12 weeks. For example, if your expenses are $4,000 for one month and your income on maternity leave is $3,000 a month, you’ll need to have at least $1,000 extra for each month you plan to stay at home.

Think about the following key points:

• Review your spending journal and identify areas where you can eliminate or at least reduce any wasteful spending. Allocate that money to savings.
• Do a little tax planning. You’ll be able to claim an additional dependent. Depending on your income, you might even qualify for the Child Tax Credit. That means more money in your paycheck.
• Stop taking mental health days. It’s fine to use your accrued sick and vacation days if you’re really sick, but save them if you can so you can use them while you’re on maternity leave.
• Talk to your HR department to see what benefits are available to you. If your company offers short term disability, consider applying during open enrollment if your coverage includes childbirth.
• Hit the consignment stores first. Your maternity wardrobe expenses could be a bottomless pit if you don’t put careful thought into what you buy.
• Baby doesn’t need 20 newborn-sized onesies. Instead of registering for baby items, request donations to your maternity leave fund.
• Consider equipping your house with gently used baby gear. Craigslist, garage sales and consignment stores are terrific sources for furniture, strollers and all the other paraphernalia you want for your baby.

The birth of your baby is just around the corner. The key to being prepared hinges on early planning. Plan for the worst, hope for the best, and pray for the rest!

How will you or did you prepare your finances for maternity leave or staying home permanently with baby? Share with us below!

Steve Repak

Steve Repak, CFP®, the author of Dollars & Uncommon Sense: Basic Training for Your Money is an Army veteran, transformational speaker and consultant. Steve was selected the 1995 Fort Bliss, Texas Non Commissioned Officer of the Year and graduated Summa Cum Laude with a Bachelor of Science in Management Communications from Amridge University. He now works for himself as a successful Certified Financial Planner™ in Charlotte, North Carolina, where he lives with his wife and three children. Steve has been a guest on Fox and Friends, 700 Club, Fox Business & Bloomberg Radio. Steve has been featured in BusinessWeek, Forbes, Yahoo Finance, and Investor’s Business Daily. For more information about Steve and his book you can visit DollarsAndUncommonSense.com

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