"Oh Baby!" - Maternity Leave Financial Win
So I have a financial win to share that I'm super proud of related to how the hubby and I were able to budget so that I could extend my maternity leave out 6 additional unpaid weeks. This took some planning before our baby boy arrived, but it was a success. SJ was born October 4, 2015. I received a total of 20 weeks paid leave from my employer including actual maternity leave, holidays, and my vacation time. Given I work in public accounting, coming back early February would put me in the thick of busy season, which I'm sure would have been an overwhelming shock to my system after being at home with my little nugget for 4.5 months.
Goal: Stay out on unpaid leave for 6 more weeks until busy season wrapped up (Which meant 9 weeks until the next paycheck)
So how were we going to make this work? In a perfect personal finance world, we would have our 6 months to 1 year's worth of expenses in savings and the conversation would be over...But since that wasn't the case for us (working on it), we needed to make sure we had enough to cover our bills for that unpaid time period. So here's how we made it happen.
1) Reassessed our budget - Given I would be at home most of this time, there were things in the budget I knew would change. I knew I wasn't going to be spending as much on gas driving to and from work so that budget line was cut in half. I cut back on my every two weeks stiletto sparkly nails and hair salon habit. Another budget savings was food. No more wining and dining with the hubby most nights of the week. I started to cook a little bit more and so did our family, who knew with a newborn, I'd have my hands full so they helped out (thanks fam!). Also I added in additional contingency for emergencies. Once we had an updated budget, we knew how much we needed in that unpaid time period. See below for a pic of the baby leave budget we used ($ amounts have been changed for example purposes).
2) Identified new income sources/savings - So we had the bulk of what we needed in savings, but there was still a gap. Given I do our taxes every year, I developed an estimate of how much we were going to get in a return, so I factored that in as a source to help cover costs. Then I started thinking about our new financial situation and planning for future baby costs, specifically daycare, it seemed like a great time to look at our larger assets and see if we could benefit from our investments. Looking at the housing market over the last year, I knew the value of our home had increased significantly. Seemed like the perfect time to refinance, not only to save during my time off, but going forward. We were able to save $150/month doing this (score!).
3) Sticking to the baby leave budget - This was probably the most important of the three. A budget means absolutely nothing if you do not stick to it and monitor your progress real time. Given I love budgeting, I made sure we knew where we stood on the budget at all times. I made sure I reconciled actual costs to budgeted costs to make sure we were good. I even timed transfers from our savings account to our checkings account to make it feel like I still was getting paid...I was just paying myself :)
Results: We made it! So I got my first paycheck this past Friday and we still had extra left over before I got paid, which we then used to pay down a credit card (mini financial win!).