I’m taking a year of parental leave to care for my new baby. Here’s how I’m making it work.
Creating a parental leave budget
Ever budgeted your entire year ahead? With our new baby on the way, I was fortunate enough to be approved for 13 months off on parental leave - 7 months paid, 6 months unpaid. I listed out every week, all income sources (such as my salary top-up and my husband’s ongoing salary), and estimated weekly expenses over these 13 months to get a picture of how realistic this would be. Will we have enough to cover a year’s expenses? How much of our savings will we need to use?
Increasing our income & savings
I invested $10,000 in a ‘parental leave term deposit’ set to mature when the 7-month paid period of my leave finished and the 6-month unpaid period started. This gave us the peace of mind that the money would be there to supplement our income if needed, while reliably earning us higher interest than a savings account. We boosted our fortnightly net income with a KiwiSaver savings suspension on my husband’s salary for the last 3 months, and I’m thrilled to be currently working on reviving a side hustle as an extra stream of income.
Using government benefits
I qualify for IRD’s maximum paid parental leave payments of $754.87 per week, which are taxed, meaning I’ll receive 13 fortnightly payments of $1011.75 after tax. After this, I’ll receive IRD’s Working for Families Best Start payments - 13 fortnightly payments of $146 - until my baby’s 1st birthday.
We might qualify for FamilyBoost depending on if we earn over or under $45,000 each quarter, but our income can fluctuate so much that we aren’t counting on it. If you have a little one in daycare, it’s worth looking into!
Trimming our expenses
In the months leading up to our baby’s birth, we:
Reduced our 2-year-old’s days and hours at daycare for the two months my husband is on leave, saving us $864 over 8 weeks;
Used my employer’s fitness subsidy to fund postnatal yoga classes for my recovery, saving us $250 on 10 classes;
Cut one of our paid TV streaming services and decided to have only one at a time
Stocked up on baby items early, buying newborn nappies & formula whenever discounted rather than potentially paying more later when we needed them.
Are you going on parental leave soon? Let me know if this was helpful and what else you’re curious about!
Sophia
