Personal Finance

Baby on the Way? How to Make a Money Plan for Your Maternity Leave

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It’s a well-known fact that the United States sits rock bottom on the list when it comes to paid parental leave, compared to other developed nations. In many countries, moms (and sometimes even dads!) get paid leave of ten to thirty weeks, or even more. In the United States, though, new moms aren’t entitled to any paid leave, and only 23% of private-sector workers have at least some paid family leave.

I was completely flabbergasted to find myself in that 23% last year when I took a full-time job with a local foundation. Even with my incredible luck, planning for maternity leave will still be tough. Yes, it’s paid, but I’ll only get a portion of my paycheck. As the primary breadwinner in our family, that’s a tough pill to swallow for two or three months.

If you’re in the same boat, you’re probably struggling to figure out how to plan for a partially- or completely-unpaid maternity leave. It’s not easy for moms or dads. Until more employers start offering paid maternity leave, we’re all just going to have to pull ourselves up and figure it out.

So whether you're already pregnant or are planning a pregnancy in the near future, here are the essential steps you should take to ensure a well-designed maternity leave.

Related: How to Determine If Your Salary is Worth the Cost of Child Care

Find out what you're due

Not when you’re due, but what you’re due. In other words, what does your employer offer when it comes to maternity (or paternity) leave?


First, understand that under the Family and Medical Leave Act, you’re entitled to twelve unpaid work weeks off in a given twelve-month period for the birth of a child. You can actually take this leave any time within your newborn’s first year, and you can even split up FMLA time if necessary. The same rule applies if you’re adopting or getting a new placement of a foster child.

Please understand, though, that you may or may not be covered by FMLA. Surprise, surprise! In short, if your company has 50 or more employees, or if you work for a public agency or a public school, your employer must offer FMLA. But to qualify as an employee, you need to have worked for the employer for at least 1,250 hours in the last 12 months.

This is counted up to the very day that you actually take leave. So, you can certainly get pregnant before your 12 months is up, but you won’t be eligible for the leave unless you have your baby 12 months or more after starting the new job.

For all you parents-to-be who are planning future pregnancies: don’t start too early! I know it’s tempting to assume you can count on a 9-month pregnancy. But if you get pregnant three months into a new job and then have a preemie, you’ll be out of luck when it comes to FMLA. That’s not a situation you want to find yourself in! Be sure to include a buffer period in your pregnancy planning if you’ve recently started a new job, so that you can count on your FMLA eligibility.

If you're at all unsure of your FMLA rights and responsibilities, check out this Department of Labor brochure that goes through all the details. Or, better yet, talk to your company's human resources department.

Company-Paid Leave and Short-Term Disability

Even if your company must offer FMLA, they might also offer additional maternity leave benefits. Or maybe you'll luck out like me and wind up with a family-friendly employer who offers short-term disability for new moms. Either way, be sure you understand every single detail of your company's maternity leave policy. Start by checking out your employer's handbook, and writing down any questions you might have. Then, talk with your HR representative to get your questions answered.

Some details you may need to deal with include:

  • How sick time and vacation time play into your maternity leave policy.
  • How long you're allowed to be out for maternity leave.
  • If your employer will still pay for their portion of your healthcare coverage while you're out.
  • How much of your pay you'll get during leave, and when you'll get paid.
  • Whether your employer will still fund other elective benefits (like your HSA or dependent care account) while you’re on leave.
  • Whether you have the option of working part-time during maternity leave.
  • If you can carry on an existing side gig during maternity leave.

I'll give you a quick for-example of how my own maternity leave policy will work, just so you can see how convoluted the details can get.

Our leave is paid through a short-term disability insurance policy. I can’t start my leave until three days after the qualifying medical event begins, however. (Since the short-term disability policy is written for all sorts of disabilities, it’s not written with baby-specific language in mind.) Because of this, I have to bank at least three vacation or sick days to take at the very beginning of the labor/delivery/newborn process.

I must be under the care of a doctor to continue receiving short-term leave benefits, and I can't bring in any income during leave. This, for me, includes income from my freelancing gigs as well as income from my primary employer. Knowing this was very important. If I make money from something other than the disability policy, then my benefits could cease, or I could even have to pay them back. Yikes!

I'll get paid on a scale, where my first month of leave is paid at a higher rate than the third month, and I can take up to three full months off. During leave, my medical insurance will stay the same and my employer will continue to put money into my dependent care account, as usual.

See how complicated things get? This is why you don’t assume you know everything about your company’s leave policy. Instead, have a conversation with an HR representative to ensure that you know exactly what you’re getting yourself into.

Also, ask about how different benefits can “play” together, especially if you want to extend your leave. For instance, you may be able to take a few weeks of fully paid, banked vacation time at the beginning of the leave. Then, you could potentially tap into a partially-paid disability or maternity leave policy. And if that won’t get you to your FMLA-mandated 12 weeks of leave, you could take the rest unpaid.

Create a maternity leave budget

Once you know what you're going to get for maternity leave, you'll want to check out what you'll need to spend during leave.

If your family is anything like mine, you don't spend all of your take-home pay on necessities. So chances are you could cut back on some frivolous spending during maternity leave, if you need to. This is what we'll have to do to get through my maternity leave, anyway!

Look at your budget stripped down to the bare essentials, and don’t forget to add in any additional money you’ll need to spend on the new baby. Even if you’re planning to breastfeed and cloth diaper, write in a bit of money for back-up formula (sometimes you really do end up needing it!) and disposable diapers (often cloth won’t fit for a few weeks).

Resources: List of the best budget apps available today

When you get to this stripped-down budget, you'll see how much you'll need for each month of your maternity leave. Subtract any money you're 95% sure you'll bring in during maternity leave, such as a spouse's income or your partial maternity leave pay.

For instance, your calculation might look like this:

  • Essential Expenses: $3,000
  • Known Income: $2,500
  • Leftover: $500

That leftover amount may vary from month to month during your leave. Mine will, since my disability policy is funded in progressively smaller amounts from one month to the next.

Regardless, this money left over is the minimum you need to save or otherwise fund for maternity leave. This is where you’ll start when planning out your time off with your baby.

Don't forget about medical expenses

One caveat here: medical expenses.

Oftentimes, the hospital bill from your birth and stay won’t come until a month or more after the baby’s arrival. The hospital has to ring up all of the charges from various departments and doctors, submit the list to insurance, and then send you the remainder.

With today's high-deductible health insurance plans, that remainder can be a scarily large amount. Don't freak out just yet!

Most hospitals and doctors will allow you to put your medical bills on a payment plan. As soon as you receive the first bill, call the hospital's billing department to speak about your repayment options. If necessary, explain that you're on maternity leave for a few more weeks, and will be able to increase the amount you pay each month after that.

The bottom line is that billing departments are used to customers who can’t pay thousands of dollars upfront for medical bills. It happens. And they’d much rather work with you to get your bills paid than ship them off to a collection agency, from which they’ll likely receive pennies on the dollar.

If you take the initiative in the very beginning, you're definitely in a position to negotiate! Just be sure that you add a bit of extra money into your maternity leave budget, so that you can begin making payments on your hospital bills as needed.

Save as much as you can

Now it's time to get down to the nitty-gritty. Those numbers you calculated above will let you know the absolute bare minimum you'll need to save to get through maternity leave. Just to be safe, though, it's a good idea to save more than that. This is especially true if the unexpected happens, like an early delivery or a necessarily extended maternity leave.

Saving may involve picking up a side gig or getting your partner to do the same. Or you could just clean up your budget for the few months leading up to your newborn's arrival. Just make a practice to push that extra cash into your savings account, rather than spending it on other things.

For a few more ways to save during these few months, check out this article on one-and-done savings, and this one on saving more with less effort.

Pay some bills ahead

What should you do if you're not a disciplined saver? Or if you'd just like to cut the stress of paying bills in a sleep deprivation-induced, postpartum haze? In this case, you can pay some of your bills ahead, so that you don't have to budget for them during your maternity leave.

You could, for instance, pay a car payment ahead of time or cover your older child's daycare expenses early. In any of these instances, though, check with the entity or creditor to ensure that your payments will be applied to future payments. Sometimes they'll automatically apply extra payments towards principle, and they'll continue to send you a bill each month.

Find other options for funding your leave

If possible, you might consider taking on a part-time job that you can do from home after your first couple of weeks of recovery. It’s not easy to work after giving birth, especially from home while dealing with a newborn. If you must have extra income or be forced to go back to your full-time job earlier than you’d like, though, it’s an option.

Another option is to have your husband or significant other pick up a part-time job during your leave. It may not replace all of your income, but it could help you make ends meet for a few months. Check out this list of work-from-home jobs that one of you may be able to handle during some or all of your maternity leave.

One other option? Ask for help if you really need it. Oftentimes, family members and close friends are already looking for ways to shower your family with gifts at the birth of a new baby. If you’re comfortable with it, you could suggest practical gifts that would reduce your overall maternity leave expenses. For instance, diapers and formula (if you’re planning to formula feed) can be huge expenses, so asking for these items rather than more baby clothes you don’t really need can be helpful.

Prepare for the unexpected

Planning for a future maternity leave usually involves looking at your options for short-term disability payments. These payments can supplement your household budget in the weeks following your baby’s arrival, and may even offer additional coverage if there are complications during your pregnancy or after the birth.

Many states (like New Jersey) make it easy for mothers to receive temporary disability payments following the birth of their child so that they can recover and bond before returning to work. If your state or workplace does not offer this coverage, though, you may want to consider purchasing your own disability insurance policy.

If you can't make it work

What if you just can’t make it work during maternity leave? What if you just have more months than your money? In this case, a personal loan or credit card may help you get through. This is an absolute last resort, of course, but if you can find a credit card with a 0% introductory APR, you may be able to use this to make ends meet during your leave. Then, pay off the card as soon as possible when you return to work, so that you don’t wind up paying heavy interest.

If you find yourself in this situation, do what you can to cut your spending back to a bare minimum during your leave. Put student loans on deferment, if possible. Use coupons and plan low-budget meals. Cut the cable bill and switch to a lower-cost cell phone plan. Shop around to see if you can lower your car insurance or homeowner’s insurance premiums.

Take as many steps as possible to cut back on spending, and then do what you have to do to get through maternity leave. After all, you’ll never get these first few weeks with your brand new baby back but, with discipline, you can stay on top of any financial issues created by maternity leave.

Abby Hayes

Abby Hayes

Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.

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