Prepare Financially Before Taking Maternity Leave
Why You Should Do It And What Can Happen If You Don’t!
Samantha and Luke had been married for a few years and were both bringing in a comparable wage. They were equally contributing to their living expenses, including their mortgage and utilities. Luke paid the mortgage and Samantha paid for the groceries and everyday living expenses (including a car loan).
Having a baby? Contact your broker.
In March 2011 Samantha found out she was pregnant – and they were both very excited! The following months rolled on very quickly and in November their beautiful baby boy arrived.
Samantha’s paid parental leave started 6 weeks after her baby was born – not straight away – first problem!
The next problem was that the paid parental leave was $400 lower than her normal weekly wage. That was huge shortfall.
Bills started to roll in, but there wasn’t enough cash to pay them.
Letters from the bank were coming in with overdrawn account notices.
• The car loan was behind.
• The personal loan repayments were behind.
• Credit card repayments were behind.
They tried to consolidate but no one would help them as Samantha wasn’t working. They tried several different banks…What should have been a very happy time soon became very stressful.
The banks were constantly on the phone chasing for payments so Samantha decided she should go back to work.
At 4 months she had a meeting with her employer and asked if she could come back on a part time basis to help cover their bills. The only option for her was to come back full time or there was no job to
come back to. As she couldn’t go back to work fulltime, she was left with no choice but to resign.
It took another 8 months to find a new job, but by that time Samantha had to settle for a full time position.
What Samantha and Luke should have done was call their broker for financial assistance. Instead, they went straight to the banks. This only resulted in knock backs – and of course their credit score was damaged in the process.
If they had contacted their broker there would have been a much different outcome.
Calling your broker is usually something that most people don’t think to do when they fall pregnant.
When we meet up with couples like Samantha and Luke (often referred to us by our existing clients) they all wish they had a broker who could have given them some advice. They now know they would be in a much different financial situation if they did. These couples now tell all their friends to sort their finances before going on maternity leave.
• Paid parental leave is currently $622.10 per week BEFORE tax for a maximum of 18 weeks only (4.5 months)1.
• Most people, on average, take 24 weeks for their maternity leave2.
• Your employer legally only has to offer you the same job back.
Therefore if you only want to go back in a part time capacity and there are no part time positions available, then you may find yourself unemployed.
Australia’s unemployment rate was 6% in January 2014 – the highest level since July 2003.
That’s a pretty scary thought!
As your finance specialist, we pride ourselves in helping you and your friends while undergoing any financial change. The most important thing to do first is to have that conversation with us, BUT we need to know what is happening in your life. To update us with your plans and circumstances, please call us or send us an email.
There’s a range of topic sheets you can request while you’re there – PLUS you get a chance to win the competition at the same time.
We look forward to hearing from you – AND your friends.
Disclaimer: The information in this article does not constitute financial or investment advice and is made available for information purposes only. It is not a substitute for the readers own independent professional advice. All investment decisions should be considered wisely and based on your personal and financial circumstances.