You’re celebrating your positive pregnancy test and want your new arrival to have the best of everything. Are you heading for the mall on a spendathon for all those cute designer baby goodies? Whoa! Er, how are you going to pay for it all?
Sorry to burst that bliss bubble, but debt-advice services say that one in five of the calls for help they receive come from parents who’ve gone over their heads into debt when a new baby arrives.
“Deciding to have a child is one of the biggest life decisions you’ll make, and costs start way before baby arrives,” says Eunice Sibiya, head of FNB Consumer Education. “So plan ahead and be prepared.”
Share the saving
Just as your expenses soar, your income often drops because you’re on maternity leave. So the first step is to start saving for your Baby Budget as soon as you can – perhaps when you decide to try for a baby, or when you actually discover you’re pregnant.
“Most people find that their usual budget doesn’t have a lot of wriggle room for extra baby expenses, so look carefully to see where you can cut down,” suggests Eunice. “Make a plan to pay off your credit card and clothing accounts, so you start your maternity leave with as little debt as possible.”
Sit down with your partner and go through your expenses, sharing savings between you. Remember to check debit orders for memberships or subscriptions you no longer use, and discuss whether you could downsize others, such as your gym membership level.
Negotiate your maternity leave
South African law gives employees (not the self-employed) four consecutive months’ maternity leave.
“Ask whether you can combine maternity leave, accumulated annual leave, and unpaid leave, in order to maximise your time off work,” suggests Bev van Nijkerk, Segment Specialist: Sanlam Young Professional Market.
Balance how long you’d like to be on maternity leave against how much this time away will cost you.
“Some employers pay up to a certain percentage of an individual’s pensionable earnings per month for the first four months of maternity leave,” says Bev. “Even then, remember that deductions for medical aid, your pension fund, and so on, still need to be paid – and remain based on your total salary, not just your pensionable salary. You must also make sure that you keep paying your own retirement annuities.”
Your employment contract clarifies how much of your salary and benefits are paid during maternity leave, with each company having its own rules, notes Bev.
Claim your dues
Help yourself by making sure you also claim the UIF maternity benefit due to you.
“If you’ve been contributing to UIF continuously for the past four years, your UIF payment usually stretches to cover most of your maternity leave,” explains Carien van der Linde, head of the gender rights department at the Legal Resources Centre in Johannesburg. “Basically, you’re entitled to one day of benefit payment for every six days worked over the previous four years, totalling 17.32 weeks (121 days) of maternity leave.”
The benefit amount ranges from 38% to 60% of your salary, depending on whether you also have other income. If that sounds like maternity leave ‘met eish’, Durban health therapist Anna Walters* had even more of a shock when she had her first baby.
“I discovered when I went to claim that commission earnings, which made up at least half of my income, aren’t included in the calculation. It only covers basic salary,” she recalls.
And no matter how tough it may feel, going straight back to work with full pay isn’t an option. To help protect that special mother-baby bonding time, legally, a mother isn’t allowed to work within six weeks of a child’s birth, says Carien.
Try to complete or at least prepare as much of the UIF paperwork as possible before your baby’s born, as you’ll be so busy afterwards, advises Eunice. Don’t be put off if you’re not well enough to make the application in person, because you can send someone on your behalf, or even get an agency to organise the application for you.
Buy with brains
Save by starting to stock up as soon as possible after you know you’re pregnant, suggests Anna.
“In the early weeks with your new baby, you don’t want to be shopping for nappies, cream, wipes and shampoo, anyway,” she says. “So while you’re pregnant, check every week which baby product is on special and buy a couple for your store cupboard.
“Research extra ways to save money, too. I saved hundreds on each vaccination by going to the free government clinic – all it cost me was patience.”
“Stock up on cleaning products and non-perishable, easy-to-cook food, too,” recommends Eunice.
Make a list for nursery items and baby furniture you’ll need. Consider throwing a party where friends come to trade or sell items from cots and strollers to designer outfits for mom and baby. Just steer clear of second-hand mattresses and car seats.
Remember, if you reuse, recycle and repurpose, you can be environmentally conscious and budget-conscious at the same time.
Your Baby Budget timeline
When applying for benefits, take your barcoded ID; proof of a bank account (e.g. a bank statement); proof of address (e.g. a utility bill); a medical certificate from a registered GP or midwife confirming your pregnancy or birth certificate if your baby’s already born; and a certificate of service if you’ve left your job, or your employment hasended.
What not to cut from your budget
- Bond repayments: Prioritise your bond repayment in your budget, because missing this just once incurs penalties, and can eventually add significantly to the cost of your home if you don’t catch up. It can also affect your credit profile, warns Marius Marais, CEO: FNB Home Loans.
- Medical aid: Check what your medical aid pays for and where you make co-payments. Find out the deadline for adding your new baby – usually within 30 days of the birth to avoid a waiting period.
- Life insurance: Even though your income is reduced, don’t cancel your life policies, as you could suffer health complications during pregnancy, says Sanlam’s Bev van Nijkerk. Over 50% of severe-illness benefit claims made by Discovery Life women claimants in 2013, were cancer-related (led by breast cancer among those aged 31 to 60), says head of research and development, Gareth Friedlander.
- Pension: Legally, an employer doesn’t have to keep paying pension and medical aid while you’re on maternity leave, says Carien, though sometimes they do in terms of your employment contract. Consider asking your employer to pay for you during maternity leave, so you can repay the arrears after returning to work.
*Originally published in September 2014