4 Powerful Secrets for Debt Management During Mat LeaveMar 17, 2019
A lot of Canadian women would agree that they’re fortunate to have the option of taking time away from their jobs to spend with their new baby. But that also means a cut in household income. Debt management is going to be important.
That’s why we’re offering four great strategies for debt management during your maternity/parental leave. Used consistently, they’ll help you keep your financial situation as balanced as possible while living on less.
Debt management tip #1: Create a new budget and start living by it ahead of time
If you don’t have a budget, now is the time to create one. If you’re already following a budget, you’ll need to revise it so that it includes your new income and baby-related expenses.
If you have a partner, you both have the option to take time off. If one of you has a higher income, how will that impact your budget during the months that person stays home? Consider all aspects of your situation while developing a budget and plan accordingly.
Start living according to your new smaller budget before you go on maternity leave. You can use the money you free up to build up your emergency savings, or to get rid of any high-interest credit card debt.
Debt management tip #2: Identify ways to slash spending
Living on a reduced income may mean going without new clothes or meals out for a while. But you can also find coupons, buy off-brand products and maximize points programs.
Also, be wary of products affected by the “pink tax” — the higher prices manufacturers place on women’s products vs the same men’s products. Ignore the marketers and buy the men’s version or choose cheaper, off-brand ones. They’re often just as effective.
Food is a big cost for many households. If you’re buying groceries on sale it can be easy to buy too much and end up throwing it out, wasting the money.
Check out Rubina’s pantry challenge at Always Save Money to learn how to keep food waste to a minimum.
Debt management tip #3: Remind yourself why it’s important to stay out of debt
Consumer debt is a serious issue in Canada. Our Affordability Index poll found that 34 per cent of millennials and 26 per cent of Gen Xers feel overwhelmed by debt and don’t know what to do about it.
Women are more likely than men to carry heavier debt (52 per cent vs 45 per cent) and more likely to struggle with affordability. Over half of Canadian women admit they’re poorly or terribly prepared for home ownership, retirement, financial emergencies and having children.
Once we’re in debt, it’s hard to get out of it, thanks to high interest charges. So while it might be tempting to use credit cards to buy something outside of your budget, consider how that might impact your family in the future.
Debt management tip #4: Become more financially literate
When it comes to financial literacy, you can always acquire new skills and knowledge to help you remain debt free.
Take our financial literacy quiz to find out how you’re doing now and identify which personal finance topics you might need to learn more about. Read blogs, listen to podcasts like Because Money and look for free financial literacy seminars in Kelowna.
Improving your financial literacy now and while you’re on maternity leave will benefit not only you but your child as well. Parents with strong financial literacy skills have what it takes to teach their children how to have a positive relationship with money — and stay out of debt — when they reach adulthood.
Nobody wants to trade the joy of staying home with baby for years of living with debt afterward. Use these four debt management tips as you prepare for your mat leave and during your parental leave and you can experience the joy while remaining debt free.
How are you planning to avoid debt during your maternity leave? Tell us your story on Twitter. #BalanceForBetter #WomenAndMoney #DebtAdvice