Preparing for Unpaid Parental Leave
According to the Bipartisan Policy Center, only 19% of working Americans have access to paid parental leave. That said, it's crucial for those looking to expand their families to prepare for this income gap financially. If you’re planning on having a baby, expecting, or looking to adopt, below are some suggestions on navigating unpaid parental leave.
Save Ahead of Time
It’s no surprise that raising a child is expensive. The earlier you begin saving, the better. When financially preparing for a child, one of the first things you should do is review your current income. Improving your financial health is also important, which we’ll discuss in the next section. Part of saving is preparing for the unexpected, so it’s critical to open some sort of emergency account. Gulf Winds’ Money Marketing Accounts can help you save and build wealth quicker than traditional savings accounts. Dividends are up to 2.50% APY.
Review your Finances
Before welcoming a child into your family, having your finances in order is important. Consider reviewing your budget's essential and nonessential expenses and be sure to account for your child's expenses. Additionally, if you’re in debt, one of the most important things you can do is consolidate your debt, review your spending habits, and adjust as you see fit.
Setting your child up for success is important and can be done through savings accounts such as Gulf Winds' MyMoney Kids and Teens Savings Account and 529 Education Savings Plan. A 529 offers tax breaks as long as the money is used for educational expenses, books, and other school expenses. However, If you need a financial boost to support your child or pay for childbirth-related medical expenses, check out Gulf Winds’ Anything+ Personal Loans.
Consider Purchasing Disability Insurance
Disability insurance can help supplement your income when you’re unable to work due to a covered reason. Some employers offer disability insurance, which in some cases can help reimburse you for lost income after the birth of a child. You can also purchase disability insurance outside of your work, typically costing less than 5% of your income. Just ensure your policy covers parental leave and that you open the policy before pregnancy, as pregnancy can be considered a pre-existing condition by some insurance providers.
Research Tax Breaks
Tax breaks can help keep money in your pocket during and after parental leave. The Child and Dependent Care Credit, for example, can help cover the cost of qualified care expenses for children under the age of 13 or other dependents. Likewise, Dependent Care Flexible Savings Accounts can help pay for dependent care services, like daycare, after-school programs, and summer camps. Be sure to review the requirements of these tax credits before enrolling in them.
Discuss Work Options
Unpaid parental leave might not be practical for everyone. That said, it’s important to discuss potential work options with your employer. If you work in an office, ask if you can work remotely for the time being so you can stay home with your child. For full-time employees, ask if you can work part-time or a more flexible schedule. If neither of these options is feasible, consider pursuing a side hustle while on parental leave. Side hustles are a great way to make money with the flexibility to spend as much time with your child as possible. For more on side hustles, check out our blog on the topic.
When welcoming a child to your family, they should be your top priority. Although taking parental leave may come with a hit to your income, there are ways to navigate this. It’s also important to save for new expenses, like higher education for your child!
Hunter Morrison
About Hunter Morrison
Hunter has freelanced for various print and radio publications across Northwest Florida, including The Bay Beacon, Navarre Press, Inweekly, Crestview News Bulletin, and WUWF. He was also the Editor in Chief of the University of West Florida’s student newspaper, The Voyager. In 2023, Hunter moved to Kenai, Alaska to take up a news reporting position with KDLL Public Radio. For fun, Hunter enjoys cross-country skiing, hiking, photography, thrifting, traveling, and looking for the best Thai food around.