How to Avoid Consumer Debt While on Mat LeaveMar 17, 2019
The big day is fast approaching. You’re totally prepared to meet your little one, but are you prepared for the drop in income during your maternity leave? To avoid adding to your consumer debt during your mat leave, now is the time to boost your financial literacy and prepare for the months ahead.
4 ways to financially plan ahead for your mat leave
There are many emotions surrounding the birth of a baby – choosing names, decorating the nursery, dreaming of what your life will be like. Those are all important parts of the journey to parenthood, but equally important is your financial readiness. Will you and your partner both take leave in the first few weeks? How will you manage on a lower income? Here are four ways to make that transition go a little more smoothly:
- Learn to live on less. What better way to prepare for a lower income than to put it into practice early on? As soon as you can, draw up a budget that includes all your monthly expenses. Instead of using your current income, calculate your expenses based on your projected income once you’re on mat leave. Start implementing this budget now so you will know what to expect. Use our budgeting worksheet or download a budgeting app. If you’ve already got a budget, use this worksheet from Practical Money Skills Canada to rework it.
- Bank the surplus. If you can live on that mat leave income before the baby arrives, the best thing you can do to prepare, is to bank the extra income that you’re making currently. Whatever money you can put away now will help you out during those early months when unexpected expenses may arise. Plus, you’ll have a gap between the time you stop working and the time your benefits begin. Now is the time to ensure you’re prepared.
- Don’t buy what you don’t need. Babies require very little in the early months. You’ll need a car seat, crib, diapers and clothing, of course. But, you really don’t need the laundry list of baby gadgets. If you’re in the market for a few key items, add them to your baby registry if you plan to have a baby shower, or, shop second-hand on Kijiji or Facebook buy-and-sell sites. You’re bound to find a ton of gently used baby gear for a fraction of the price of retail.
Check out Kerry’s comprehensive newborn essentials list over at Squawkfox.
- Don’t add to your consumer debt. Many Canadians are impacted by consumer debt, but parents are one of the most likely demographics to be overwhelmed by it. Before your bundle arrives, brush up on your financial skills by making a plan to deal with debt. Refer to your budget to see how much extra money you can put toward your credit card balances, loans and lines-of credit each month. Try to boost those payments before your income drops. You could try the debt snowball method to pay down smaller debts first or explore your debt repayment options using our debt options calculator. And, if you’re already overwhelmed with debt, it pays to speak to a debt professional now so you can find a solution that works for you.
Are you prepared to live on a lower income during your mat leave? How will you boost your consumer debt payments before the big day comes? Share your thoughts with us by connecting with our Twitter community #LeaveDebtBehind #BalanceforBetter #ParentingTips