Step 1. Are you taking maternity leave?
Decide how many weeks off work you are taking (4, 8, 12 weeks?). Are these paid? Unpaid? Partially paid?
Pro tip: If you are not planning on getting pregnant for another year, now is the time to look into a short-term disability policy that will cover natural childbirth. This is a savings game-changer. Paying $1,000 (average estimate – my plan was $880) annually for a policy that will pay you 70% of your normal wage while you are on maternity leave will majorly cut down how much you need to save.
Make sure you find out the policy dates for when it will be covered for you. Most policies will cover any pregnancy 9 months and beyond the initial policy date. Meaning, the policy won’t work if you purchase it when you are already pregnant.
As an example for this question:
Let’s say you are taking 10 weeks maternity leave and you make $3,500/month that is part of your monthly budget for living expenses.
10 weeks work = $8,750.
If your work will pay you for 4 weeks and then the last 6 are unpaid, then you will need to make up $5,250.
Or,
If you have the short-term disability that will pay you 70% the whole time (10 weeks = $6,125), then you only need to make up $2,625.
For our first child, I took 8 weeks. I had no pay from my work and no short-term disability (this meant a lot of saving happened on my end).
Step 2. Are you predicted to have a healthy pregnancy?
This is such a hard question to answer because you can’t predict the future. What I mean by this is, has your doctor warned you about any possible complications or need for possible bed rest? Are you at risk for any complications? If you haven’t talked about it, just ask your doctor.
If you are, this is something to think about, especially if you could end up on bed rest needing to quit working sooner. If you have disability coverage for something like this, then it will be a non-issue. If you do not have coverage for this, then you will need to have an extra 2-4 weeks of work savings set aside.
I have been super fortunate to not have any issues and have been able to work until I popped with both of my kids. I always had the fear of what if I couldn’t work a month before I was due. Would we have been okay?
The best thing you can do to not have this worry is to have an extra month of income saved. It is worth it to take away the stress of the unknown.
Step 3. Look at your health insurance plan to understand maximum out-of-pocket costs you could have.
This is a bit scary to think about, but again, I am all about planning for worst case scenario (if we plan it won’t happen, right?). I had a separate baby fund account (within our checking account) and a medical fund account specifically for hospital bills.
In a perfect world, you would save the entire max out-of-pocket amount (ours was about $7,000). I know we are not in a perfect world, so if you can’t, make sure you at least have your deductible plus a little more saved.
Nobody wants to be paying off their child for the next ten years, and yes, that happens all the time. If you can plan and save for this, it will be so much better to leave the hospital with your new child and not take the hospital bills home with you for the next decade.
Step 4. Write up a mock budget for the first month after you have your baby.
Take a look at what your budget will be while you are on maternity leave. Figure out how much you will need to live during that time. With you not working there are some costs that may decrease from their normal amounts, as well as some that will increase.
Decreasing costs may include: gas (less travel for you to work), food (you may have freezer meals prepped or be eating out less since you are home), clothes (you will not want to shop with your postpartum body for a while)
Increasing costs may include: electric/gas (more lights and laundry in use with you at home), a baby category will be added (formula, nursery water, little odds and ends you need for newborn essentials), newborn photos
Example: You determine your budget will be $3,750/month during maternity leave (when it is normally $4,000).
Step 5. Now bring your spouse’s income into the equation. Write down how much they are making per month.
Example: Husband’s pay $3,500/month.
This was a simple step :-).
