How Can I Survive Maternity Leave Without Going Broke?

By
Photo: H. Armstrong Roberts/ClassicStoc/Getty Images

Eva, 34, lives in Brooklyn and is pregnant with her second child, due in February. Her job at a marketing firm offers five months of maternity leave, which she’s thrilled about, but only eight weeks will be paid. (When her first baby was born, she had a different job that allowed her 12 weeks of leave, only six of which were paid.) In theory, she and her partner should have started socking away money long before they wanted another kid, but that seems impossible, especially in New York. None of her friends, whether they’re moms or not, talk about saving for maternity leave. How should she go about financing the three months that she plans to be on unpaid leave?

Plenty before me have hollered themselves blue over the abysmal dearth of parental-leave support in this country, but the hard facts remain absurd —how have we not fixed this yet? Out of the world’s largest 180 industrialized countries, we are only one of two that does not mandate paid maternity leave, according to the International Labor Organization. The other is Papua New Guinea. It’s embarrassing, really.

Eva, I dearly wish you didn’t have to ask this question, which we’ll get to in a minute. If you lived in one of many other countries, you’d get 100 percent of your salary (comprised of a combination of funds from your employer and the government) for at least 12 weeks, if not the whole five-month stretch (in Russia, of all places).

Still, your eight weeks of paid leave puts you head and shoulders above the majority of Americans who don’t get any at all. Instead, they’re stuck with the measly Family and Medical Leave Act (FMLA), which was passed in 1993 and offers 12 weeks of unpaid leave. And moms only qualify for that if they’ve been at their company for over 12 months, have worked at least 1,250 hours at said company during the past year, and — most arbitrarily — are employed at a location where their company has 50 or more people on staff within 75 miles. Again, this only guarantees a woman that her company will do her the great service of not firing her while she’s out.

Now, back to your question. I don’t have kids, but I know plenty of people who do, and it is stressful business. The last thing you want on your list of immediate concerns during those bleary post-birth months is your bank balance. But here we are.

For a financially focused take on parental leave, I reached out to Allyson Downey, the CEO and founder of weeSpring (which is like Yelp for baby products) and author of Here’s the Plan: Your Practical, Tactical Guide to Advancing Your Career During Pregnancy and Parenthood.

Partway through her first pregnancy, while she was working (very successfully) at a male-dominated Wall Street firm, Allyson had a scare and was subsequently ordered by her doctor to go on bed rest, immediately. She went straight home and set up a “bedroom office,” only to find that her company couldn’t — or wouldn’t — accommodate her need to work outside its walls, despite her eagerness to do so and repeated entreaties to HR and her supervisor.

She was then nudged out of her job, rather quickly — not fired, but not really able to return, having lost her entire book of business. Luckily for all of us, she wrote a book about it, went on to become a major entrepreneur, and has devoted herself to making sure that other women don’t have to go through what she did.

“Saving up for having a baby is not that different from a rainy day,” Allyson told me. “I encourage women, whether or not they want to have kids, to start putting away part of their paycheck as soon as they have enough latitude to be able to do so. You know that essay about the fuck-off fund? Having money that you’ve been disciplined enough to set aside will open so many doors.”

It’s unfortunate that, in this country, pregnancy counts as a “rainy day” (or doors that need opening), but it’s always true that life is better when you get in the routine of squirreling away dollars as early as possible. Just like physical health, you can’t really cut corners on your financial well-being. And while it’s never (never!) too late to start saving, you also can’t make up for lost time in just a few months. Allyson has spoken to some women who copped to financing their maternity leave with credit cards. (It’s surely no coincidence that average consumer debt peaks in people’s 30s — in the midst of one’s childbearing years.)

You might need to get creative — Allyson has a friend who supported her maternity leave by selling some of the Apple stock she’d wisely purchased ten years previously. If you can lean on your partner’s salary a bit more, this is a time to do so. Otherwise, it’s a good old-fashioned game of spending less than you make.

Like many parents, my friend Sarah and her husband made a number of sacrifices when they were preparing to start a family, including moving from Brooklyn to a less-expensive suburb. She’s a nurse, and received six weeks paid leave for a vaginal birth (as opposed to the eight weeks she would have gotten for a C-section). Beyond that, her employer allowed her five months’ leave total, which she took — using rolled-over vacation time and the savings that she and her husband had built up over the previous year.

“I was very strategic with vacation time, especially once I got pregnant, and accrued as much as my company allowed,” she told me. “We also started saving extra money almost immediately once I got pregnant. I think we did what a lot of couples do: We cut down on dinners out, splashy vacations, extra clothing and shoes, and alcohol (which was easy for a pregnant woman).”

Lauren, who works at a nonprofit in Boston, took three months’ paid leave, mostly comprised of accrued sick days she’d been rolling over for years, plus a fourth month unpaid. “To be honest, we didn’t make huge sacrifices to plan for it because we had a significant amount of savings built up already,” she said.

However, things still got hairy when she returned to work. “For me, the financial impact of child care is much greater than those four weeks that I took unpaid,” she said. “Planning for it was something I did not do well. I personally believe that when you are pregnant, it’s almost impossible to know what you will want for child care. It’s just so different when the baby is here.”

The astronomical cost of child care is a separate beast entirely, but ideally it’ll be your first financial hurdle after birth, not the one you drag up to after scrimping your way through a few unpaid months.

But what if you haven’t started saving until now? You’re in the majority, and almost everyone I polled said the same thing. “I have to admit that with my first pregnancy, I did effectively no planning,” said Elizabeth, a friend with a 3-year-old and one more on the way. “I took six weeks of paid leave from my job and then quit, because I’d lined up part-time freelance work (which turned into my current full-time gig) with my previous company. But I wouldn’t say that was strategic. I was in the lucky position where my husband’s salary was enough to cover us without me working if we were relatively frugal, especially if I was able to supplement with freelance work.”

Due next March, she’s just found out that her current company only offers three weeks’ paid leave, and is scrambling to figure out what to do. “A good friend works for an Italian insurance company and is expecting a baby at the end of the month — she’s getting 12 weeks off, fully paid,” she added. “I guess a gal can dream?”

Another friend, Caroline, started beefing up her savings shortly before she and her husband got pregnant. “Being Type A (and broke), I started a baby fund months before we started trying, so I was able to put my end-of-year bonus in there (after putting some into my 401k), which made a huge difference,” she said. “The rest was nothing big — probably about 100 bucks a month. Once I got pregnant, I freaked out about our financial situation and picked up a bit more freelance work, all of which went straight into the baby fund. We emptied it in about two weeks after paying a horrifying amount on my birth, which cost thousands of dollars, even with health insurance — and all I had was, like, two Motrin and a super-crappy room for two nights. Where did it all go?”

Great question. Most insurance plans — even generous ones — don’t fully cover childbirth and its myriad potential complications, and it’s worth looking into yours to avoid (very) unpleasant surprises. Even more importantly, for your unpaid leave, remember that your insurance fee comes out of your paycheck — so if that paycheck isn’t issued, you might have to send a personal check to your insurance company to stay covered. (This topic is on Allyson Downey’s list of questions to ask your employer about maternity options — Eva, I recommend you take them to HR and tick them off one by one.)

On that note, many insurance companies actually consider pregnancy a “disability,” and cover it as such — so make sure to sign up for that during your next enrollment period. Even if your company already provides paid maternity leave, you can sometimes get additional paid time off by lumping in disability leave. (Eva, hopefully you don’t have to worry about this, but some women who try to sign up for disability while already pregnant get denied because particularly shameless insurance companies consider it a “preexisting condition”— just something to watch out for.)

Andrea, a physical therapist in Denver, cobbled together a meagerly paid leave with a combination of disability and vacation time. “Honestly, maternity-leave laws in the U.S. are a joke,” she said. “My job offered the basic FMLA criteria of 12 weeks unpaid leave. In addition to saving portions of my paycheck once I got pregnant, I used my remaining vacation days for the year (two weeks) and disability insurance coverage (seven to eight weeks for C-section recovery, which amounted to about $450 per week) to finance the first few months.”

Eva, one suggestion is to take a close look at how much you spent during your previous maternity leave — delve into your old bank and credit-card statements and tally everything up. Then, with your partner’s help, aim to save up a rough equivalent. Another blueprint to consider is a 2010 USDA report that shows the average middle-income family will spend roughly $12,000 on child-related expenses in their baby’s first year of life. In current-day New York City, your costs are likely to be significantly more than that, but you can hopefully find some shortcuts — using hand-me-downs from your older child, for example.

This isn’t your first rodeo, so you know what you’re getting into. And it’s excellent that you’re planning to maximize your leave option. As you probably know, scientific studies show that returning to work later (more than three months post-birth) has a positive impact on both mental and physical health for mothers, which can translate into a smoother reentry overall.

Now, to end on a high note, some encouraging news: Last spring, New York state passed a law mandating up to 12 weeks of partially paid family leave, which will be phased into effect starting in 2018 (it won’t go fully into effect until 2021). In April, San Francisco became the first city in the U.S. to mandate six weeks of fully paid parental leave for any gender, starting next year. Meanwhile, three states (California, New Jersey, and Rhode Island) currently offer partially paid time off for new parents. And finally, many leading corporations (Google, Amazon, Apple) are raising the bar by instituting gold-plated parental-leave policies as a “perk” to attract and retain talent. We may be coming from very far behind, but at least we’re heading in the right direction.

I can’t wait for the day when your concern becomes universally obsolete.