Ask The Readers – Cut Short Maternity Leave To Save Money?

by Mike Holman

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I recently received an email from a reader called Ermyntrude*.   She is having a baby (congrats) and is worried about the loss of income resulting from an extended maternity leave.

We are trying to plan our finances so I’ll be allowed to take a full year off but, since I earn at least double what my husband does, we might have to get creative to make that happen.  We are good savers, but the large disparity in our incomes concerns me and I am going to prepare myself for a 6-month mat leave after which time, maybe my husband could take his 37 weeks parental leave.

We discussed a number of EI-related rules*, but her big concern was having to shorten the mat leave.

I was sort of thinking I would be back to work after 6 months or so because I think most mat leave top-up periods are only 6 months (though if I could negotiate the full year, I sure would try!), and because my salary is considerably higher than my husband’s, we might find things a bit tight after the top-up is finished.  Ideally, though, I’m hoping that if we save enough by trimming costs and diverting a portion of my current RRSP contributions to more liquid savings vehicles (e.g. TFSA, other savings account once TFSA maxed), we might be able to swing it….more number crunching ahead!

My answer

If you want my honest advice – take as much time as you possibly can and don’t worry about the money.  You won’t regret it.

Readers – what do you think?  Should Ermyntrude take a year off and deal with the money later?  Or just take 6 months and keep the family finances on solid footing?

*Names have been changed for privacy.

[edit]
One of the rules we discussed is the most commonly misunderstood rule about maternity and parental leave in Canada – Parents do NOT have to share the time off.  Mommy can take a year off, Daddy can take 37 weeks.  They can do it at the same time or not.

Read my post about maternity and parental leave rules in Canada.

EI( Employment Insurance) payments on the other hand, have a total 50 weeks worth of payments which can be paid to one parent or shared between two.

Reader Mark sent me an email this morning asking why parents with twins aren’t eligible for 50 weeks of EI each?  Good question.

[end edit]

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{ 20 comments… read them below or add one }

1 Nicolas

You can always make up the money, you can’t make up the time. Babies are only babies once.

2 JP

Don’t worry about your finances. If your husband is ok with you taking the full year then do it. It is a great time for him to be off as well so I understand the desire to split the time. Let the decision be based on everything else other than the finances as it sounds like you have savings that you can dip into in case it is needed. You will find that your expenses will decrease quite a bit once you are staying home. You will end up having more in your pocket…especially when your salary is being topped up! None of your work related expenses will be incurred and it is difficult to spend money when the baby is keeping you busy and joyfully exhausted. As long as your EI and spousal income can pay for the essentials (heat, home, electricity, car payment, food etc) then you can swing it no problem.

A bit long….Good Luck and I wish you a healthy baby!

3 Fernando

Directed to Ermyntrude:

First, congrats on the baby! Truly a joyous occasion!

As part of a couple that did something similar to what you plan – my wife had a 6 month leave, since at the time as a contractor she did not get EI – my suggestion is to strongly consider taking the full year. While better for you (bonding and all), it is better for the baby as well – the extra 6+ months the baby has to build up immune system, get stronger, … will be beneficial once he/she goes to daycare/grandparents/homecares/…

On the other hand, one possible argument to go back early is for your own psychological well-being. If things are going to be so tight that you’ll spend 6 months stressing over finances, then I strongly suggest you consider going back early. Do NOT underestimate the impact of stressed-out parents (and money being a key source of stress) on family life.

Again, congratulations, and Merry Christmas!

4 BeatingTheIndex

Take the full year, spend as much time as possible close to your baby. Enjoy being with your child as soon enough you will be leaving him at daycare and someone else will be raising him for you.

What’s a year anyways? it goes by super fast and you have the rest of your life to make up your finances.

5 Rena

If you are Cdn, you can both take paternity leave, stagger them. Perhaps she could go for 7 months and let hubby take the balance…it doesn’t have to be 6 mos. We also cut back on everything to live on one salary before baby arrived so that we would have money saved and also see how things went. That is a major key…because if you haven’t cut back on your lifestyle and spending before baby, you will have so much more pressure. I also had opened an account where the Child tax credit went directly and never touched it for anything till they got much older…it has paid for the othodentist, it has funded the REEE, and numerous other investments (such as DRIPS) and also paid school costs. In the beginning it was such a small amt…only $20 a month that I felt that I wouldn’t miss it. Everyone told me that didn’t make sense to not spend it on diapers (except my Mom LOL) but I just kept putting it away and now it is a very nice addition to their lives. (I shall miss it when my baby (no. 3) turns 18 in 2 yrs.

6 Rachelle

If the baby has colic, go back to work right away :)

I would say it depends, I’m self employed and my husband took care of the baby, I had no mat leave at all so I worked pretty much right away. Fortunately my job is one of those where I have to be available all the time…but my appointments are pretty brief.

I got to spend a lot of time at home. I just wanted to point off that child care is really boring interspersed with wonderful moments, so there is not too much intellectual stimulation, which is difficult at times. Some people just don’t like it.

7 Ying

Totally agree. You won’t be regret for what you have done for your kids. I remembered that I went back two weeks earlier than the full year and I have return government whatever I earned during these two weeks. What a waste….

8 Echo

If it’s just about money, you should still try your best to take the full year off to spend with your child. You can find a way to make it work, and it’s true that your expenses will decrease with one spouse staying at home (more home cooked meals, less dress clothes and Starbucks, etc). Actually, this is only true if you breast feed rather than use formula, but that’s a whole other discussion :)

If it’s about missing your career or stimulation from the outside world, then you should just take the 6 months or split the time with your husband. There really is only one way to find out…and that’s by doing it for a few months.

9 Kevin H - Family Health Benefits

Solid finances are more about what your spend than what you earn. Find ways to make ends meet on the 55% income replacement provided by EI. The opportunity to bond with your infant will be gone before you know it.

If you lived south of the border in the U.S. your question might be very different. The U.S. has no federally mandated maternity leave pay, just 12 weeks of job protected leave. Take advantage of the benefits you do have, and make the most of this precious time.

10 Gail

My dil is expecting twins in June and she and my son were also debating the same situation. The decision…My dil is taking a year off from work and school and is staying home with the twins. They are going to tighten their wallets and hope for the best.

As the stay home mother of 6 grown children and after helping raise 4 of my 7 grands while their parents worked…. I am glad I stayed home with mine and it was horrible telling my dils about the babies taking their 1st steps or how I found their 1st tooth and seeing the tears in their eyes and the yearning in their voices when they would tell me they wished they could stay home and not miss all of the things I was getting to see.

11 Leslie

Agree with Mike, and also Fernando’s caveat about money-stress. If there’s any way it can be done, then stay home with your child as long as possible; the first year in a baby’s life is amazing. Your life (you and your husband’s) will totally change when your little one is born–this is just the first of what will be a lifetime of decisions balancing what’s best for the child, your role as a marriage partner, and your own self. Good luck and best wishes for a safe delivery and healthy baby :-)

12 Tim

I agree to take the time off, assuming you have a pension you may want to enquire about who tops up the year that you are off. In my wife’s case she took the year off and we were on the hook to pay the missing year into the plan to keep it accumulating for that year. The alternative is that you loose one year and have to work one year longer to accumulate the amount of points and revenue for your pension.

13 Christine

I just finished my maternity leave year at the end of May. Reading what Ermyntrude wrote reminded me of myself while pregnant – super organized, busy, planning everything out. I hate to break it to her but this all changes the second your baby is born – and be prepared that busy bees like us usually have early babies which take you by surprise so be ready 2 months early for SURE! Mine came 3 weeks early but other mothers I met weren’t that lucky and were caught even more off guard. I feel obligated to write a bit to you because you will soon realize you cannot plan your future so easily until you meet your child.

First of all, she will get top up for 7 months, not 6. Technically it’s the last 20 weeks of the 52 weeks that you only get E.I. I have chosen to take extended unpaid leave for an extra 15 months until next September. This means no income. I also am a woman, obviously, and am the sole breadwinner as my husband is a student. Not everyone’s employer will hold their job for them that long, so I am very grateful. But you also get money from the government – from the sounds of your income it will likely be only around $200/month, but still better than nothing. We have chosen to put all of that money into our son’s RESP rather than spend it.

I can honestly say that no matter what you plan or think, you never are going to know what to do until you have the whirlwind of having a first child. Your mind will change from month to month. Everything is completely crazy and nothing is as you expect. I never imagined I’d be someone to watch a toddler all day, but your baby’s personality will be what it is, and some are more needy than others. If Ermyntrude has a calm sweet little girl who sits and smiles all day, she’ll be fine. That’s completely what I expected based on stories from the grandmothers. However, we were blessed with a very active, extremely communicative/demanding and restless boy who will never sit still – not even to go in a stroller nor a carseat. He was strapped to one of us for his first 8 months 24/7 or else he SCREAMED and he was like this from day 1 in the hospital which every doctor and nurse alerted us to! We adore him – he’s great. These qualities make for a very curious, fun, super bright little guy now that he’s talking and running and playing. The Fussy Baby Book by Dr. Sears was a life saver. We are now so RELIEVED to be through the first year and a half. Going back to work is the last thing on my mind and I never would have thought I’d be saying that.

I believe Ermyntrude will find that once she is a mother, everything she planned might change and money will be the least important factor, as the others have also said.

As a 40-year old first time mother, I felt so cheated by all women with children after the fact that they must have been laughing at me when I would say all the things I was going to do on my year off and later. Reality: I had absolutely zero time to myself anymore and it was the hardest adjustment in my life and I was completely overwhelmed by it all. Luckily, I did not suffer any form of depression and have a great husband who helped me although he was also completely overwhelmed.

My point is that the busy working world we live in is not conducive to attentive parenting and Ermyntrude is going to be shocked by the halt of the world she is used to and will have to stop worrying about a couple years of salary and hopefully will focus her time on the much more important duty of being a good and attentive mother who nurtures her child, who may demand mother and not father. It is the hardest thing I’ve ever gone through and I’ve done a lot of things in my life.

Oh well, I hope that is something to help keep an open mind. I know if someone said these words to me when I was pregnant I surely would have said “yeah, whatever” because you never realize anything until you go through it yourself.

I know this answer may not be focused on the money-related question but it is more based in the reality that her next 2 years will be based on. The money will be the LAST thing on their minds as they welcome this little being into the world and say “oh my goodness – what did we get ourselves into” but hopefully feel the tremendous joy that comes along with watching them learn and grow so much so quickly and the duty to put their needs before our own. Our son didn’t walk until almost 17 months old – do you want to miss the first steps or first words b/c you were at work? Remember – the time put in when they’re young means less trouble when they’re older – secure attachment and self-confidence is priceless. It’s a huge sacrifice but the most rewarding experience you’ll have.

14 Mat Leave Mommy

As someone who is presently in my 9th month of maternity leave, I would recommend “Ermyntrude” do what she can to stay home for longer than six months. I know every situation is different, but I myself felt that the first six months were a blur and it is only these last few months I am really enjoying my baby. Personally, I would have found it REALLY hard to go back to work at the six month mark when things were just starting to get easier and my baby starting to become really interactive with me. I think the second six months before returning to work are a joyous and cherished time to bond with my baby and get to know her personality now that is it coming out. I wouldn’t trade this for all the money in the world, and I also make more $$$ than my hubbie and was topped up for only 6 months. It’s tighter than our past lives as DINKS, but well worth it for us. And I barely have the time/energy to go out and spend money anyway! :) Depending on the employers flexibility, perhaps Ermyntrude could plan to return to work at 12 months, but change those plans and return to work earlier if she finds she is too financially stressed to enjoy her leave or dislikes being home full time as some people do? And since they are “good savers,” they will likely have no problem making up for any shortfall after she returns to work, though personally I would have no qualms about bleeding my savings to make up the difference. This time is more precious to me than money in the bank.

15 Mike

I agree with Kevin.
“Solid finances are more about what your spend than what you earn”.

If you make twice what your husband makes, and he makes anything more than 25K$, that makes a family income of more than 75K$ on a regular basis. If hubby makes 40K$, that’s a family income of 120K$ and more; if more, well…

I’m not saying that these numbers are a jackpot, but it is enough to make ends meet, and be comfortable unless you have lived and spent like people with 1.2, 1.5 or 2 times your income in the past years.

If you haven’t spent everything in the past, you should have somewhat of a financial cushion; this is the time to use it.

If you have spent everything and more, I’m sure that a baby will show you happiness even with less money. Remember, the baby doesn’t mind if he or she does not have a brand name stroller ;-).

One exception is if you are not sure to regain the “same position” as you had when you go back after one year; my wife cut her maternity leave because she was losing too many clients who did not want either to wait for her or do business with her replacement.

Enjoy the baby for he or she, in about 14 years, may be totally convinced that you are among the stupidest people in the country ;-)))).

I’m no expert… just my 2 cents… but I’ve been there.

16 Ermyntrude

Hi all — Ermyntrude here. First — thanks for all your helpful comments! I really appreciate your insights and hearing the perspectives of people who have been through all of this. As I mentioned in my e-mail to Mike, we are in the planning phase so there is still quite a lot of number crunching to do as part of that plan. I think it just feels rather scary to consider removing the source of income (i.e. my job!) that I have become accustomed to for the past 6 years. I realise that there will still be the EI allotment, of which I would be getting the max of $40, 000, and the top-up for a while, but emotionally, me not working feels like zero money coming in at all and that feels very stressful, even though I know logically and realistically that that won’t really be the case.

As I mentioned, we have been successful at saving for big events in the past (e.g. $30K in just over a year in preparation for our wedding, but that was before we owned a house…) and we do have some savings already accumulated that we plan to keep building on until a baby enters our lives. We don’t live like paupers, but I’d say we are pretty conservative spenders – the two-tonne 30″ CRT television in our living room and our still unfurnished sitting room are good examples of our patience when it comes to acquiring “stuff” just for the sake of having it and our general approach to spending on things we actually need. Once we have a better handle on the expenses to expect with a new baby (thanks for the helpful baby expense posts on this blog!), maybe the whole money-during-mat-leave thing won’t seem so daunting…like I said, there is more number-crunching to follow!

One thing that seems clear from a lot of your responses is that I really should try to take the full year off if I can, and that would definitely be my preference if it is possible. As Nicholas said above: “You can always make up the money, you can’t make up the time. Babies are only babies once”. So, long post short — thanks again for all your comments. You’ve definitely given us lots of food for thought. Wish us luck!

17 Hank

Ermyntrude should take a year off and deal with the money now instead of later. She and her husband should be cutting costs drastically before the baby arrives and stashing every spare dollar they can aside for the day when she quits working. Are there costs and other expenses that can be cut back in preparation for taking the entire year off?

18 DoNotWait

Take your decision regarding your feelings towards staying home or not. Some women really enjoy their career and want to get back to work after a couple of months. If its your case, them go for it, as I think happy mothers make happy babies. BUT! If its only based on financial issues, then forget about it! A year with your baby is just priceless! Time goes by so fast with kids, you will never regret to have spent time with them. You might on the other hand regret to go back to work sooner… you have to be really convinced it the best choice for YOU, not for your finances, for your couple or for your family, but for you. To me, if you hesitate that much, it is because you’d rather stay home. Then, stay home! There are always ways to manage money differently so you won’t miss any.
So congrats and enjoy! Babies are the best gift one could have.

19 Jaymus (RealizedReturns)

It’s already been said a few times, but regret is the big one. Think about it this way: In your old age with death knocking at the door, you may take some time to reflect on your life. Which of the following two statements is more likely to cross your mind:

“I really wish I had spent less time with the kids and more time working”

“I really wish I had spent less time working and more time with the kids”

20 Mem

Ermyntrude, the max gross EI payment is only $413 per week (which totals $21,476 a year).

This is a taxable income and usually the government does not take off enough taxes from EI and at the end of the year you may end up owing taxes.

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