Money·5 min read

How To Financially Prepare For Maternity Leave

Puzzle Pieces
Design: theSkimm | Photo: iStock
November 8, 2021

The Story

There’s no promise of paid leave for parents in the US. Translation: If you're adding a member to the fam, it's on you to piece together a plan to afford the necessary time off.

Wait. Isn't there a law that says companies have to give you maternity leave?

You might be thinking of *checks notes* every other industrialized country in the world. Or maybe you're thinking of the federal Family and Medical Leave Act. It guarantees up to 12 weeks of unpaid leave without losing your job and healthcare benefits if your company has a certain number of employees.

Several states (like California, New Jersey, and Washington) also offer some paid family and medical leave. Exact rules vary by state, but the gist is you get a weekly benefit payment equal to a certain percentage of your usual income. Beyond that, there aren't other gov-mandated policies for new parents.

Walk me through how I'm supposed to pay for this.

Your company may still offer some paid leave for expecting parents. Look at your employee handbook and/or talk to HR about the policies. Find out how much time you're allowed to go OOO and how you'll get paid.

What could that look like?

A puzzle, probably. Your employer could have you combine a variety of leave options for your time away. Think: sick days, short-term disability insurance (which may cover just part of your base salary for a limited time), vacation or other PTO days, and whatever paid family leave your state might offer. Some may give additional paid leave on top of that. If you think you need more time or money than what's offered, you may be able to negotiate a better package.

What's the best way to ask for (more) paid leave?

Be strategic. If you can, rally coworkers to approach your boss or HR with you. There's power in numbers. And research shows that women often have better results when advocating on behalf of others.

Head to the negotiating table with a clear picture of what you want: more time off, more pay or other accommodations. Pro tip: cite what your company's competitors are offering. Then explain how paid leave is a win-win. A good policy not only helps companies keep their fave employees on the payroll – which is cheaper than hiring replacements – but it can also attract new talent. In one 2017 survey, 25% of women said they strongly consider parental leave policies when comparing jobs.

Zooming out: more paid leave policies keeps more women in the labor force overall, which is good for the economy. And a strong economy is good for everyone.

What if some or all of my mat leave is still unpaid?

Start prepping your budget ASAP. Here are a few tips:

  • Know how much you'll need. Remember: your new arrival comes with a lot of new costs. So review and update your budget now to estimate how much you'll need to cover your time at home. If you have a partner, see if/how you can make it work on only their income.

  • Cover yourself. If your employer doesn’t offer a short-term disability plan, you might be able to get your own policy from a private insurer. The catch: they may not cover pregnancy or time off to care for a child. So be sure to read the fine print when picking a plan.

  • Start a sinking fund. Think of it as the opposite of an emergency fund. A sinking fund is a place to put money for a planned expense outside of your regular budget – like maternity leave. Consider opening a high-yield savings account that lets your money earn a little extra interest.

  • Trim expenses. Downgrade or cut subscriptions. Anything you can do to cut your spending now means more savings to help cover costs during your leave. 

  • Stop saving for later. Not your usual personal finance advice. But when you’re struggling to afford life now, know that it’s okay to press pause on saving for later, like your retirement. Put that money in your maternity leave fund instead. Just remember to start saving for the long-term again once you're back on the payroll.

Anything else I should know about mat leave?

Get ready for your comeback. Before you say ‘see ya’ to your coworkers, work with your manager on a plan for leaving and returning to the office. Figure out how you’ll offload your projects and responsibilities. Let them know if and how you can be contacted while you’re away. And decide what your transition back into the office will look like. Maybe that includes easing in with part-time hours or working from home to (re)start. Setting up a slow return can buy you a little extra time with your new addition without costing you extra income.


What NOT to expect when you're expecting: guaranteed paid parental leave. The US is the only developed country without it. And while some employers and states offer some paid leave, it's up to you to put together a combo of PTO, short-term disability, other coverage, and your own savings to pay for the time you need to focus on your growing family.

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