As new parents you want to spend as much time as possible with your new arrival, and while you're entitled to 26 weeks maternity leave, you might also want to take the additional (unpaid) 16 weeks available.
If you have enough social insurance (PRSI) contributions, you are entitled to Maternity Benefit for the 26 weeks’ of basic maternity leave. Maternity Benefit does not cover additional maternity leave, so you'll need to consider affordability.
It's a really good time to take a look at your finance each year, and even more so when you're expecting. With the cost of living ever-changing, you need to know you're budget covers all the necessities. It can be challenging for many parents to survive on maternity pay alone and while you may be lucky enough to work for a company that offers enhanced maternity pay, not every company can afford to, so make sure you check your contact.
Taking out one or more personal loans to cover this time is often a consideration for parents to be. If you are in a position to do that, it would give you a very clear outline of what you can expect during those months on maternity leave, without having to figure out how you can deal with unexpected expenses.
How much do new parents take out in loans to cover maternity leave?
According to a report from Credit Karma, women take more than two years to financially recover after maternity leave and one in four women take out loans of, on average, €3,200 to cover their maternity leave. Those loans are used to pay for costs directly related to baby clothes and supplies as well as non-direct costs like bills and groceries.
The report shows that women spend twenty-six per cent of maternity leave loans on baby clothes and supplies, thirty-two per cent on bills, and forty-two per cent on groceries.
Work Out Your Finances Before You Take Out a Loan
Before you decide to take out a loan to cover maternity leave yourself, you should first work out your finances to determine how much you will need during the maternity leave period.
Spend time breaking down your expenditure into basic costs like bills and groceries, costs directly related to your baby, such as clothes and nappies, and nonessential costs, such as entertainment and holidays.
During the financial planning stage, it's also a good idea to check your credit score , look at options for making your money work better for you, such as consolidating debts, and ask your loved ones about how they managed their finances after having a baby.
You should also talk to your employer about the specific maternity leave support and benefits that are available and explore government schemes and assistance.
Use a Personal Loan Calculator
Once you have worked out your financial position for the period of maternity leave, you can determine whether it makes sense to take out a personal loan. But before you apply for a loan, make sure you use SoFi’s payoff calculator to ensure you don't pay more interest on a loan than you should.
For instance, you can compare your existing debt information to find out how reducing your interest rate and monthly payments can enable you to save on the total interest.
So, should you take out a personal loan to cover maternity leave?
At the end of the day, you are the only one who can determine whether you should take out a personal loan to help cover your maternity leave. But by spending time working out your financial position and how much you will need during the months of your maternity leave , you will be in a good position to determine what the best option is for you.
