There’s no doubt that taking time off work to bond and care for your new baby is very important. Before you decide which one of you should stay home and for how long, it’s also important to consider how maternal and parental leave benefits may affect your household finances.
The lowdown on maternity and parental EI benefits
Government of Canada employment insurance (EI) maternity benefits are for biological mothers, including surrogates, who can’t work because they’re pregnant or have recently given birth.
Moms can enjoy up to 15 weeks of EI which can be paid as early as 12 weeks before the expected birth date, and can end as late as 17 weeks after the actual birth date. The weekly benefit rate is 55% of the mother’s average weekly insurable earnings (the government defines insurable earnings as the income level up to which EI is paid). As of Jan. 1, 2019, the maximum yearly insurable earnings amount is $53,100. This means that you could receive a maximum of $562 per week.
Parents with a newborn or newly adopted child or children are eligible for parental benefits, which feature two options.
Standard parental leave benefits
This can be paid for up to 35 weeks. They must be claimed within one year after the child was born or placed for adoption. The weekly benefit rate is 55% of the claimant’s average weekly insurable earnings up to a maximum amount. Two parents can share the 35 weeks of standard parental benefits.
Extended 18-month leave benefits
This can be paid for a maximum of 61 weeks and must be claimed within 18 months after the week the child was born or placed for adoption. The benefit rate is 33% of the claimant’s average weekly insurable earnings up to a maximum amount. Two parents can share the 61 weeks of extended parental benefits.
The government of Canada has more information to help you see if you’re eligible for EI maternity or paternity benefits.
If you live in Quebec, your province has separate rules for maternity and parental benefits.
Eligibility for the Canada Child Benefit
The Canada Child Benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under the age of 18. The CCB might include the child disability benefit and any related provincial and territorial programs.
The Canada Revenue Agency (CRA) uses information from your income tax and benefit return to calculate how much your CCB payments will be. To get the CCB, you must file your return every year, even if you didn’t have income in the year. If you have a spouse or common-law partner, they also must file a return every year.
Benefits are paid over a 12-month period from July of one year to June of the next year. Your benefit payments will be recalculated every July based on information from you and your spouse’s (if applicable) income tax and benefit returns from the previous year. You can use this calculator to determine what your payments may be.
Budgeting for your post-baby life
Now that you have a way to determine how much income you’ll have, you can take the next step and budget for family life. If you don’t already have a household budget, experts suggest you create one.
If you do have one, you need to adjust your budget with your post-baby income and expenses. This way you can see if there are any potential shortfalls so you can adjust other expenses to help balance your budget.
If you’re still in the baby planning stage, it’s also recommended that you begin to set aside some of your savings for baby-only expenses such as diapers, clothing, a stroller, bottles, etc. That way you’ll be ahead of the game when your child arrives.
Where you may spend less
While you or your partner is off work, there are lots of things you won’t be spending as much money on: your daily coffee and lunches out, transit passes or parking, your work wardrobe and daycare, seeing as at least one parent will be home from work. You may also find that because you’re spending more time at home, you’re more likely to make dinner instead of eating out or ordering in.
The cost of having a baby
First up there will be lots and lots of baby stuff, from cribs to car seats, clothing to toys. However, there are all kinds of ways to save money on these items such as opting for previously loved items from a second-hand store, consignment shop, or a friend or relative whose child has outgrown them. There are also lots of baby items that you don’t have to buy. Talk to other new parents, then make a list of only the things you really need.
Some of the other things to consider go along with being an adult and a parent. The first consideration is life, critical illness, and/or disability insurance to help protect the financial well-being of your new and growing family if something tragic should happen to you or your partner.
Next is a will for both of you, which can also help secure your family’s finances. At this stage in your life it should be fairly simple and inexpensive.
Another very adult thing to do is take a first aid course so you can be better prepared to respond to your child’s inevitable illnesses and mishaps.
Even though it feels like a long way off, you may also want to start a registered education savings plan (RESP) to begin saving for your child’s post-secondary education.
Get more information and advice
Check out our article about preparing your finances for having kids.
Talk to an expert
Not feeling confident in your finances? You can talk to one of our financial security advisors who will work with you to craft a financial plan tailored to your needs.