Congratulations! You’re having a baby! Now for the tricky part. Managing the finances with half the income while you take maternity leave.
Will you, as a couple, have a joint access account and a ‘what’s mine is yours’ approach? Or will you have to justify every coffee you buy? Do you both have the same approach to spending money? Or is one of you a spender and the other a saver? Are you financially prepared for baby’s arrival – or do you have zippo savings?
Oh, so many questions!
Popping out the baby can seem like the easy part compared to working out the family finances! There’s a baby to feed, bills to pay, a house to clean, relationship to juggle… And important conversations to have to ensure your financial arrangements are fair for both the income earner and the stay-at-home mum (or dad) who’s taking maternity leave.
Skipping those important conversations can be costly, and have negative consequences on relationships – for both the care giver’s self-esteem and the earner if they aren’t making enough to cover the bills. You may assume ‘this’ may happen while he may assume ‘that’… and we all know what happens when we ‘assume’ things … it makes an ‘ass’ out ‘u’ and ‘me’.
While taking maternity leave the carer, who statistically is most often the mum, gives up her ability to earn an income and have financial independence for a period of time. She loses her ability to earn superannuation while absent from the workforce, sick leave entitlements, holiday pay, promotional opportunities and more. And if her partner, who is still earning an income, is tight with the purse strings, it can cause a ripple effect of emotional and logistical issues.
These women can end up feeling powerless and submissive if their partner assumes financial control. They feel guilty or like they have to justify every cent spent and avoid social gatherings or catch-ups that involve money being spent, becoming isolated from friends.
Other couples with brimming bank accounts and fewer overheads, on the other hand, may appear to breeze through this period with a joint access bank account and similar spending style. Then there’s the couples who are somewhere ‘in between’.
Every family is different and every family will manage their maternity leave finances differently.
Relationship expert Katia Loisel, who is working alongside ANZ on their Love Insurance finance campaign, agrees. “When it comes to new parents, there’s no such thing as the norm,” Katia explains. “Parents, like their beautiful babies come in all shapes and sizes. And the new addition to the family doesn’t always arrive when we plan, or when we have our finances or support in place. For many new parents, particular those without a support network or without savings, those first few years can be a struggle.”
Katia says that for many couples, this nesting phase is where ‘I’ becomes ‘we’ (times three) and this change in circumstances and finances can bring financial differences and issues to a head.
“In order to increase financial harmony and reduce conflict and stress, it’s important that you communicate honestly about your financial expectations,” Katia advises. “For instance, do a budget together and set some mutual financial goals and revisit your finances once a month.”
Related: 7 Newborn Challenges Parents Face
The ‘F’ word: How couples should talk finance
Katia says it’s also important to ask the tough questions around money. These should include:
- How do you both feel about shared financial roles and decision-making?
- What are their concerns, if any?
- How will financial roles (bill paying, budgeting, long-term planning) be split so that we both feel empowered and involved in the decision-making?
- If you’re starting a family, who will look after the kids?
- Will your finances be pooled and if so, when do you need to check in?
In this special maternity leave money series, Katia shares advice with six couples – all with varying financial situations to help them navigate the murky cash, parenting and relationship waters.
This week, Rachel, 38, shares her story while Katia gives her priceless tips!
“I receive a weekly allowance.”
“My relationship with Matt was on ‘fast forward’! We met, moved in together, were pregnant and then bought a house within seven months of meeting. We knew we loved each other instantly, but didn’t have time for financial talk!
“I’ve always just lived from pay to pay but Matt is more organised with his money. When we found out I was pregnant he bought the house and put it in is name, but I contributed to the mortgage repayments (although a lot less than he did because he earns twice as much as me!) until I went on maternity leave to have our son, Ollie, who’s now 10 months-old. Since While I have been off work, Matt has been paying the entire mortgage (principal and interest) and gives me a weekly allowance, which I always run out of.
“I’ve asked mum to lend me money several times as I feel bad asking Matt for money. I feel bad because I brought nothing financially to our relationship and Matt has to support us both, and has bought the house, so don’t feel it’s my place to complain or say something. But I can’t survive financially. He worked out a budget for me but he just thinks I spend my money on coffee and lunches all day. To be honest, I actually think taking Ollie out to get a coffee or socialise is important for mine and baby’s sanity. It gives us something to look forward to each day – to get out of the house and be social and active.
“When I return to work fulltime, the plan is that I will pay for Ollie’s day care ($102 per day x 5 days), plus contribute a small amount towards the mortgage. I’ve allocated a small and strict weekly allowance for myself to cover coffee, bus fares to work, and lunch – but I’ll have no buffer or money left over. Matt will pay majority of the mortgage.
“My concern is that so many expenses come up that you don’t plan for – you need extra funds in your account to cover them, but because Ollie wasn’t planned (financially) I don’t have any extra cash. And also, I feel like I need to pay half of everything and contribute, but I’m limited because I earn half the money my partner does.”
Maternity Leave Money: Katia says…
“Money is one of the most important influences on relationships, with 9 in 10 people believing that financial problems are likely to push a relationship apart. Unfortunately, when we’re choosing Mr. or Mrs. Right most of us are so focused on falling in love that we don’t think twice about whether we’re compatible when it comes to money. We come into a relationship with our own upbringing, experience, expectations and values towards money and often the way we view money can be quite different to our partner. However, many couples skirt around financial discussions and that can cause problems down the track. So, it’s important to make talking about your expectations and finances a priority.
“The arrival of a child can affect the dynamic in a relationship and create a power imbalance, particularly if one partner is earning considerably more than the other and the topic of money hasn’t been discussed. While you might feel as though you’re not contributing, you’re nurturing and caring for beautiful little Ollie, and you can’t put a price on that. It’s often not realistic for someone to pay half when they don’t have the same earning potential.
“The truth is, we often don’t understand what someone else (even someone we love) is going through, particularly when we’re trying to deal with our own daily stressors or feel overwhelmed, unless they tell us. Perhaps now’s the time to sit down and have that money talk, lay everything on the table, go through the budget and expenses together and have an honest talk about current and future expectations.”
ABOUT: Katia Loisel is working alongside ANZ on their Love Insurance campaign. Love Insurance helps put into perspective that we all want to look after our loved ones and life insurance is a way of showing you’ll be there for your loved ones. Main image: Photography by Dakota Corbin