Among the most exciting times for a couple is when they bring a new life into the world. This joyous occasion can be so overwhelming that young parents-to-be can sometimes overlook the expenses that come with it. While you will have to plan for all the expenses that go into raising a child, the first step is to get a financially secure position for maternity leave. The first step is to understand the duration of maternity leave available to you.
Every working woman is entitled to paid leave when she enters motherhood. As per the latest amendment made by the ministry of labour to the Maternity Benefit Act, 1961, working women can avail 26 weeks of maternity leave without any loss of pay. This regulation is applicable to both private and public enterprises.
In case you choose to either adopt a child or become a parent through surrogacy, you can avail a paid maternity leave of up to 12 weeks. Of course, you can always choose to take a longer leave of absence if you need, but your pay for this will depend on the policies adopted by your workplace. If you plan to take a longer leave of absence, it is best to discuss the same with your HR manager to understand the applicable policies. For example, some organisations permit you to use your unused paid leaves, sick leaves or casual leaves for the year in conjecture with your maternity leave others may need you to report back at work and then apply for these separately. Some may even have a provision for extended maternity leave at 50% of salary.
You cab avail maternity leave from 8 weeks before the delivery due date. Further, you can extend the fully paid maternity leave by 4 weeks in case of a medical or health complications. Typically, you will have to present a medical certificate to support your claim.
Financial planning for maternity leave starts by first estimating the expenses you will have to bear when you are on leave. If you don’t already know what your monthly expenses are, spend a month to monitor your expenses and find out where the money is going. Then, add the additional expenses of hospitalization, child care, celebrations and ceremonies to estimate to get the total projected expenditure.
Once you have done this, make an estimate of all the income you will get during the leave. Remember while full-time employees will get 26 weeks leave with full pay, freelancers and contract employees may have to face loss of pay. If your income turns out to be higher than your estimated expenses - you are starting on a good footing. But, and as is likely, if that is not the case, the difference is the minimum amount you need to save up by the time you go on maternity leave.
The key to successfully meet your saving targets is to make it automatic. If you do not see the money in your salary account, you will not be tempted to spend it elsewhere. So, set up an automatic transfer to your preferred saving instrument - be it a saving account, a fixed deposit, or a SIP.
Further, from the expense list you had made, identify “low hanging fruits” - the expenses you can cut down without much effort. Say, don’t go out to eat every week or skip that new film in theatres. Further, if you get a tax return or a bonus during this period - don’t splurge it on yourself but add it to your savings. You have to play not just for the maternity leave, but also for all the expenses that come with raising a child.
You should get a maternity cover as soon as you plan a child. The reason for this is simple: most health insurance policies have a waiting period before the maternity cover kicks in. A few insurers like ICICI Lombard General Insurance (Bharti AXA General Insurance*) also provide maternity cover as an add-on with no waiting period. This will cover all medical expenses related to pregnancy and the newborn for six months. Check with your insurer for the different options that may be available to you.
Saving for maternity leave is but a start to a total budget overhaul. So, even after you have put together enough financial coverage for maternity leave, don’t break your saving habits going and plan for future childcare expenses, life insurance premiums, increased medical costs, and education fees.