Returning to work after a period of parental leave can be an emotionally tricky experience. Being back on the job means rejoining a professional, adult world of interactions and expectations, a far cry from baby-focused life. Of course, it’s tough to give up the comforting habits and routines of parental leave, not to mention missing out on the joy of bonding with your young child.
Whatever feelings you experience, the last thing you’ll want on your mind when you return to work after parental leave is worrying about whether your finances are ready to handle what’s next. While going back to work may mean you’re earning more income, there’s a good chance your costs are changing, too.
The best way to know whether your financial situation is healthy, or needs healing, is by building a budget that accounts for your new income and all your expenditures, including a few potential new ones. Before you start budgeting, make sure your parental finance plan is on the right track by reviewing these helpful pointers.
Find affordable, reliable childcare
Unless you’ve got family or friends helping out, childcare is likely the biggest cost you’ll face when you return to work. The earlier you’re able to find reliable care for your child, the sooner you’ll have the security of knowing what it’s going to cost moving forward, and can build that into your budget. Remember that fees are most expensive when children are younger, and the ratio of caregivers to kids is highest.
Some families may qualify for subsidized childcare or other assistance programs – look online for local and government support options if your finances are stretched thin.
Start an education fund for your child
If you haven’t done so already, now’s the time to start saving for your son or daughter to pursue a post-secondary education. It doesn’t matter that they’re still in diapers – you want as much time as possible for your child’s college fund to benefit from the power of compounding. With more than a decade and a half of growth opportunity ahead, any contribution you can make now will have ample time to appreciate in value. Add automatic deposits to an education savings account to your financial plan so you can set it and forget it.
Also, remember to visit your financial institution and open a Registered Education Savings Plan (RESP) for your child. Based on your contributions, you can access up to $7,200 in federal funding through the Canada Education Savings Grant.
Set aside some money for an emergency fund
Parents have plenty of responsibilities, and one of them is preparing for bad outcomes. Having money on hand in case of an emergency, whatever it might be, can reduce stress and make some problems go away with minimal pain. If you don’t already have an emergency fund, start building one by regularly diverting some money towards a high-interest savings account. Your goal should be to save enough cash to cover three to six months of living expenses, insulating you from many of the financial emergencies that might come your way.
Build some self-care into your budget
Balancing work and parenthood can be draining and increases the risk of burnout. Many of us struggle to find enough time to take care of ourselves, and some may face cost barriers to certain self-care activities, whether it’s working out with a trainer, massage sessions, or time spent with a personal therapist.
Book time in your calendar for regular self-care activity that meets your individual needs and, if possible, set some money aside in your updated budget to fund your preferred option.
Consider life insurance, and make sure you have a legal will
Parents love having peace of mind when it comes to securing a comfortable future for their kids. One of the ways to help make sure your children are taken care of is by purchasing a life insurance policy that would provide financial support to your loved ones in the event of your death.
Likewise, it’s essential to have a legal will that designates your intended beneficiaries following your death. Make sure you have the right documentation in place, and check that it’s up to date with your current wishes.