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Money and Maternity Leave

The joys of parenthood are countless. Bringing a new life into the world changes everything. Yes, the sleepless nights, dirty diapers and the incessant crying of neonates can be a bit much to take, but the bliss of seeing your child grow outweighs all of the woes of early parenthood.

 

For the working woman, the pressure of taking care of a newborn is compacted with the financial challenges of a diminished income while on maternity leave. Many Canadian families have struggled with the change in cashflow when only one partner is working, and for single-parent households the cash crunch can be even more stressful and mentally debilitating.

 

2017 Federal Budget extends Parental Leave to 18 months 

 

In March of this year, the Liberal government extended parental leave to 18 months from 12 months. This will help many parents find less expensive child care as spaces for toddlers tend to cost less than children up to 18 months old. However on the flip side, parents who choose to stay home longer will have to deal with lower Employment Insurance benefit at rates of 33 percent of their average weekly earnings, instead of the previous rate of 55 percent.

 

Additional Caregiver Benefits too?

 

Within the new budget, the feds also changed EI to introduce a new caregiver benefit that is intended to aid families who are enduring serious injuries and illness that are not life-threatening. Previous EI legislation only applied to situations where was a “significant risk of death”. For example, the new benefit would extend up to 15 weeks in a situation in which a family member is incapacitated in a car accident but is expected to make a full or partial recovery.

 

Earned income on leave will be taken back

 

Remember Mom: If you work while receiving EI maternity benefits, the government will deduct the money you earn from your benefits; dollar for dollar at that. While receiving EI parental benefits you are permitted to earn up to $50 per week or 25 percent of your weekly benefit (depending on which one is higher) before any deductions are made.

 

However, the federal government has launched a Working While on Claim pilot program that will end August of 2018 in which once you served the waiting period, claimants are able to keep 50 cents of their benefits for every dollar they earn while on claim, up to 90 per cent of the weekly insurable earnings used to calculate the EI benefit amount.

 

How to survive the Mat-Leave Cash Crunch

 

Discuss your finances with your partner on a regular basis. This has been and will always be a team effort. Even if one partner is more responsible for managing money for the household, you must both make an effort in keeping up with how much money is coming in and out of the home.

 

Start tracking your expenses by looking at how money is spent over a month. Throw every receipt into an envelope, pencil case, or zip-lock bag and add everything up. If the result shows there is more of an outflow than an inflow, you need to begin cutting back.

 

Understanding the difference between needs vs. wants, allows you to prioritize your expenses. With the exception of food, housing, transportation costs and medication, everything else would be considered a “want”. Going out for dinner and a movie, needs to be replaced with meal planning and enjoying a movie at home.

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Rico Johnston

Rico Johnston has been helping people get mortgages for over 18 years in the Greater Sudbury area. His passion for entrepreneurship and making a difference in the lives of others has garnered him the reputation as premier mortgage broker that makes the personal goals of his clients, his own objectives. A Sudbury native, with strong ties to his community, Rico is determined to not only get the best possible deal on mortgages for his clients but also to provide sound advice on personal finance.

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