Are you REALLY getting a deal?

January 21, 2015January 21, 20152 Comments

One thing that you learn when you become a parent is that the cost of “stuff” for babies and kids can add up pretty quickly. As a result, many of us are always trying to get deals on these things to help keep costs in check.

But how do we know we are REALLY getting a good deal? I remember once talking to a mom friend about how much I love Costco because the savings on the diapers alone make the membership worth while. She said “nah, I always just buy the diapers on sale at the grocery store.”

And here was her mistake. I find that stores are always tricking us into thinking that because we are getting something “on sale” that its a deal and that we are saving money or if the price is lower. And what makes it even more confusing is that the package of one brand often doesn’t contain the same amount of product as a comparable product.

This is why you can’t look at how much the price is “on sale” and compare that to the original price or even the price of another brand, but how much the price is PER UNIT at that location as compared to the price PER UNIT at another location or the price PER UNIT of a comparable brand (say, Pampers vs Huggies).

So to really know if you are getting a “deal” or paying the lowest amount is to look at the unit cost. And the kicker is, that many store actually post the unit price on the price label on the shelf! So the diapers that are “on sale” may still be more expensive than a comparable brand at the regular price or the same brand of diapers at the regular price in a different location.

Here is an example of 3 stores selling the same brand and size of diapers (all prices taken from the store websites or store visits). At first glance, Costco seems the most expensive because the price in total is $48.99. But because there are more diapers in the package they sell, the unit cost (i.e the cost per diaper) is actually the lowest.

You may think to yourself, ok but is $0.02 or $0.09 really worth the hassle? Well consider it this way – what is the cost difference per month? Say a 20 month old uses on average 5 diapers a day. That is 150 diapers a month. This is what the difference per month would be:

So that is almost $15 per month difference for the cost of the exact same product. Imagine doing this with just a handful of products that you buy regularly and the impact on your budget.

That being said, I’m not saying that Costco is the solution. There are things even at Costco that aren’t always the cheapest option. Plus, even if something MAY be cheaper because it is bought in bulk, it doesn’t always make sense – if you only eat quinoa once in a blue moon, there is no point to buying a 2KG bag of it just because you save $0.05 per gram or whatever.

But next time you go shopping, remember, all you do is just take the total price and divide by the number of items/weight (grams/oz) in the package to get your unit cost – and use THAT as your basis for comparison to see if you are REALLY getting a deal and saving the most money.

Happy saving!

30 Day Shred – Level 1 – First 10 Days

January 11, 2015January 26, 20153 Comments

2014 was a great year for me. We did a lot of travelling (New Zealand to visit Jordan’s family, Poland for a friend’s wedding and a road-trip to the East Coast of Canada ), my youngest son finally started sleeping (thank you Good Night Sleep Site!), I got a makeover on the Marilyn Denis show (watch it here) and I turned 30.

But 2014 was also the year that I realized that its been awhile since I was really in shape and looked it. Sure, I was fairly active (its hard to be sedentary when your toddler learns how to walk!) and I even did the Toronto 1/2 Marathon in under 2 hours, but I just couldn’t shake that last 15 lbs that stubbornly refused to budge after the birth of my second son.

It was frustrating because after my first son was born, I lost the weight very quickly – within 8 months I was in my best shape ever, even though I gained over 50 lbs during my pregnancy.

Pregnancy #1: I lost almost 50 lbs thanks to Weight Watchers, breastfeeding and running.

I wanted to feel good and look good. But with two kids and a husband that works very long hours, I knew that a gym wouldn’t be a realistic option for me. I’m not a big fan of the gym either. I much prefer the classes, but the ones I actually want to take never seem to be at a convenient time for me. Plus, gyms are EXPENSIVE and I’ve never been able to make them worth the cost (and you know me – things have to make sense financially for me to pursue them, haha).

I needed to figure out a way to do what I needed to do at home. Running was great in the warmer weather, but any fitness expert will tell you that strength training is equally, if not more, important as cardio.

So when I came across Nurse Loves Farmer’s post in December on how she got into shape doing Jillian Michaels’ 30 Day Shred, I was inspired – and bonus? I actually already HAD the DVD (I bought it at a discount store a few years ago for something like $5 and promptly forgot about it) and some hand weights, so there would be NO financial outlay!

I decided that I’ll start 2015 with a challenge to complete the 30 Day Shred by early February (I wanted to give myself a couple days buffer for rest days and illness).

30 Day Shred – Overview

The 30 Day Shred is made up of 20 minute exercises that comprise of strength training, cardio and ab work (with a warm up at the beginning and cool-down at the end). However, I’d budget about 30 minutes to factor in getting changed into workout gear, setting up the DVD etc. There are 3 levels, with level 1 being the easiest, so I decided to do 10 days at each level. All I needed were some hand weights (weight is not specified) and a mat.

Level 1

Even though this is the “easiest” level, its still a good work out, even for someone who is in moderately good shape already. I was very sore after my first session and even after the 10th session I was still doing the modified push-ups and sweating a lot.

I used 8 lbs weights, which I think is much heavier than most people use from what I’ve read but its all I had (a relic from a 6AM bootcamp I did a few years ago) so I decided to suck it up. I was able to use them for all the strength exercises except the lateral lunge and arm raise – for that I used these 1 lb ball weights that I got as part of a fitness package at some point (and let me tell you, even by day 10, those light weights were killing my arms!).

I quite liked this first level. The session just wizzes by as Jillian varies the exercises a lot and I always feel like I’m done in no time. It made it that much easier to be motivated to do them. I was able to do this level 10 days in a row but I’ll admit I felt a bit tired on day 7 and probably should have taken that day off. I’ll be taking a day off before starting Level 2 and will definitely take one mid-way through it.

My results so far

At the start of the program I weighed in at 160 lbs on the dot and weighed in at 158 lbs exactly 10 days later. I can feel my muscles developing and can especially see more definition in my arms and abs, though I’m not sure the pictures really reflect that. I still have some muffin top left (that is my #1 thing I want to get rid of!) but have high hopes that this will greatly diminish after the 30 days (in Sarah from Nurse Loves Farmer’s post I mentioned before, the last 5 days made the biggest impact).

I combined this program with a modified version of the Atkins diet (and have lost around 9 lbs since starting it in early December). I haven’t cut carbs completely but have, for now, cut bread, pasta, potatoes, rice and any type of baked good or junk food (well, with the occasional “cheat”). I’m actually eating much healthier over all since am eating way more veggies, some fruit but continue to drink a glass or two of wine 4-5 times a week. I’ll have to figure out how to add back some of those more “carby” carbs once I reach my goal weight, but I’ve realized that there will need to be a LOT more moderation involved than in the past. I just don’t have the metabolism to be able to eat those foods too often.

Anyway, without further a-do (is that how you spell that?), here are my before & after pictures from Day 1, Day 5 and Day 10!

1/3 of the way there! I can see a little more definition in the abs – can you?

* I do want to mention that my Day 1 full body profile was taken some time in November when I weighed more than 160 (probably 167 or so). I didn’t think to do a full body pic until Day 5 but found that one which I took prior to starting my lower carb diet in December.

Why you need to contribute to your child’s RESP – NOW

October 1, 20141 Comment

Nothing bugs me more than people not taking advantage of free money. But people do it all the time. Many Canadians are not taking advantage of their company defined contribution pension plans (where companies will match a percentage of the employees contributions) and another place that this occurs is with RESPs.

My son “graduating” from pre-school. Hopefully the first of many graduations!

What are RESPs?

RESPs – Registered Education Savings Plans – allow parents in Canada to contribute a certain amount of money every year to save for their child’s education and get a government match of 20% of the amount they contribute, up to $500 per year (so to get $500, a parent would need to contribute $2,500), with a life time maximum of $7,200. Many provinces also have their own additional grants as a way on encouraging parents to contribute.

Although unlike with RRSPs (Registered Retirement Saving’s Plans), the money you contribute is after-tax money and is not deductible. The interest and any earnings on the plan though are not taxable until it is taken out and the idea is that it will be taxed in your child’s hands when they are a low-income student.

Why you should start contributing ASAP

The cost of university tuition and fees has been outpacing inflation since 1998 and the cost of four years at university for a child born in 2012 is expected to be over $100,000 if the pace remains the same. Combine that with the Government of Canada saying that currently over 2/3rds of all jobs require some sort of post-secondary education, those who won’t have one will be at an even bigger disadvantage then they have been in the past. So in order to give your child the best start at adulthood, you would want them to be able to get a good job AND have as little debt as possible holding them back, right?

However, the main reason you want to start contributing as soon as possible is because you want time to be on your side:

1. You can get up to $500 per year – however, you can only make up for ONE year when you contribute. So if you don’t contribute for several years, that matching amount will be lost for good (though you can contribute every other year and make up for the year before). To ensure you get the maximum of $7,200 this means you need to be consistently contributing $2,500 per year for 14 years.

2. You may be too late. You can only receive the grants up until the year that your child turns 17 – however, there is also a rule that says if you haven’t contributed by age 15, you won’t get ANY grant money for ages 16 and 17.

3. It is an automatic 20% return on your investment – even if you just left the funds sitting in cash, an RESP will earn as much as a much higher risk investment without the risk. But invest all those funds into a low risk investment, like a mutual fund or even GICs, you will get an even higher return.

4. Its easier on your budget. Putting aside $100 or $200 every month from from birth to age 17 is much more doable for families than the $1,000 or $2,000 per month they would have to contribute to make up for it if they start contributing once their child hits their teens.

5. Compounding. Your child’s RESP will continue to accumulate in value even if you don’t contribute for a few years. For example, say you contributed $2,500 the year they were born but didn’t contribute anything else except the $100 per year that is required for the four years before your child turns 16, even at a conservative rate of return of 5% here is how much money you would have:

Year	Starting Balance	Contribution	Grant	Rate of Return 5%	Total
1		$ 2,500	$ 500	$ 150	$ 3,150
2	$ 3,150	$ –	$ –	$ 158	$ 3,308
3	$ 3,308	$ –	$ –	$ 165	$ 3,473
4	$ 3,473	$ –	$ –	$ 174	$ 3,647
5	$ 3,647	$ –	$ –	$ 182	$ 3,829
6	$ 3,829	$ –	$ –	$ 191	$ 4,020
7	$ 4,020	$ –	$ –	$ 201	$ 4,221
8	$ 4,221	$ –	$ –	$ 211	$ 4,432
9	$ 4,432	$ –	$ –	$ 222	$ 4,654
10	$ 4,654	$ –	$ –	$ 233	$ 4,887
11	$ 4,887	$ –	$ –	$ 244	$ 5,131
12	$ 5,131	$ 100	$ 20	$ 263	$ 5,514
13	$ 5,514	$ 100	$ 20	$ 282	$ 5,915
14	$ 5,915	$ 100	$ 20	$ 302	$ 6,337
15	$ 6,337	$ 100	$ 20	$ 323	$ 6,780
16	$ 6,780	$ –	$ –	$ 339	$ 7,119
17	$ 7,119	$ –	$ –	$ 356	$ 7,475

That’s right – just that initial contribution of $2,500 would lead to almost $7,500.

But now imagine that you DO max it out – THIS is how much money you would have for your child:

Year	Starting Balance	Contribution	Grant	Rate of Return 5%	Total
1	0	$ 2,500	$ 500	$ 150	$ 3,150
2	$ 3,150	$ 2,500	$ 500	$ 308	$ 6,458
3	$ 6,458	$ 2,500	$ 500	$ 473	$ 9,930
4	$ 9,930	$ 2,500	$ 500	$ 647	$ 13,577
5	$ 13,577	$ 2,500	$ 500	$ 829	$ 17,406
6	$ 17,406	$ 2,500	$ 500	$ 1,020	$ 21,426
7	$ 21,426	$ 2,500	$ 500	$ 1,221	$ 25,647
8	$ 25,647	$ 2,500	$ 500	$ 1,432	$ 30,080
9	$ 30,080	$ 2,500	$ 500	$ 1,654	$ 34,734
10	$ 34,734	$ 2,500	$ 500	$ 1,887	$ 39,620
11	$ 39,620	$ 2,500	$ 500	$ 2,131	$ 44,751
12	$ 44,751	$ 2,500	$ 500	$ 2,388	$ 50,139
13	$ 50,139	$ 2,500	$ 500	$ 2,657	$ 55,796
14	$ 55,796	$ 2,500	$ 500	$ 2,940	$ 61,736
15	$ 61,736	$ 2,500	$ 500	$ 3,237	$ 67,972
16	$ 67,972	$ 2,500	$ 500	$ 3,549	$ 74,521
17	$ 74,521	$ 2,500	$ 500	$ 3,876	$ 81,397

Why you don’t have any excuses to NOT contribute

If you are in Canada and you have a child that is less than five years old, you have NO excuse to not contribute to the RESP. This is because every child in Canada, no matter what household income they come from, is entitled to received $100 per month every month until they turn 6 years old in the form of the Universal Childcare Benefit.

So to FULLY take advantage of the government matching plan and get the full $500, you would only need to fork over an additional $108 per month. This is not a lot of money and I bet that most families would be able to find room in the budget to accommodate this. Lower your cable or phone package, hunt for cheaper insurance plans, shop at the discount grocery stores, buy the store brand diapers. Keep maximizing your RESP contributions at the forefront of your mind when making other budgetary decisions. If you need to finance a new car, if you are picking a model that makes it difficult to maximize your RESP contributions, you are picking a car that is too expensive.

But even if you really can’t afford to maximize the contributions every year, remember anything you contribute is better than nothing, especially earlier on.

Still struggling? How about asking grandparents and aunts and uncles to make a contribution to RESPs instead of buying pricey toys for birthdays and Christmas. Use any money your child received for baby showers, baptisms, bar mitzvah’s or other milestone events as contributions. This is what we do – my parents don’t buy my kids expensive presents – they make a contribution to their RESP every year instead and its helped us ensure that we get the full $500.

What if my child DOESN’T go to university?

First of all, the RESP money can be used for pretty much any post-secondary program. This includes universities, colleges and various post-secondary education programs outside of Canada as well. So there is a lot of choice.

But here are your options:

1. Leave the RESP open

The RESP can stay open for 36 years, which gives your child a chance to change their minds (trust me, the novelty of working as a bartender will wear off when they start serving people who are younger than them and that more money).

2. Change the beneficiary

You can also transfer funds to another RESP beneficiary (such as a sibling). If you have an individual plan, you may have the option of naming another beneficiary. If you have a family plan, you can use the earnings and certain federal and provincial grants to pay for the education of another child under the plan (certain fees may apply though – you need to discuss this with your RESP provider).

3. Transfer the money to your RRSP

You might be able to transfer up to $50,000 of earnings tax-free from the RESP to your RRSP under certain conditions.

4. Close the RESP

The contributions you made are yours to keep and you get them back. You do have to return the grant money from the government, however if the RESP has been open for 10 years and the beneficiary is at least 21 years old and not continuing post-secondary education, you can keep the investment earnings. Please note that a 20% fee and income tax will apply. If you have a group plan, you cannot get the earnings back as these are shared with the other plan members to increase their payments.

5. Transfer the money to a Registered Disability Savings Plan (RDSP)

It may be an option for you to transfer the RESP funds into an RDSP if the beneficiary of the RESP has a severe and prolonged mental impairment that can reasonably be expected to prevent the beneficiary from pursuing post-secondary education.

So get saving – remember you have until December 31st to contribute to make the year count.

Can you afford to be a stay-at-home mom? 5 steps to see if you can.

May 22, 2014March 11, 20152 Comments

Both times when I was pregnant with my boys, I used to visit internet forums where I could chat with other moms and moms-to-be. While we discussed many parenting (and many non-parenting) topics, one topic that dominated was whether or not to stay home after their babies were born.

Now, I’m not saying that all women should stay home and be stay-at-home moms. Some love their jobs and want to get back, some don’t want to lose their momentum in their careers and some just know they can’t afford not to. But all moms will want to take some time off after birth and many want to know how long that period can be – be it a month, a year or several years.

While in Canada we are entitled to a year of maternity leave and many can claim employment insurance benefits, it isn’t a given that everyone can afford to take this time off or if they should from a financial point of view.

So, if you are considering becoming a stay-at-home mom or already know this is something you want, this post is for you.

Step 1 – Update your budget as if you were a stay-at-home mom.

Like with all things financial, its all about the math. So the first thing you should do is delete or adjust the income of the parent that will be staying home from your budget (while I do refer to stay-at-home-MOM, I really mean “parent” since this also applies to dads who want to stay at home as well).

Kasia’s Basic Family Budget – updated template

Step 2 – Analyze your budget

Next have a look at what this does to your housing and essential fixed cost allocation (so your rent/mortgage/property taxes/insurance). If this amount is now greater than 40%, you CANNOT afford to stay at home – at least not in the current home you are in – whether or not the amount you save on daycare is more than the income you were bringing in (I’ll do a post on this later – because unless you TRULY make a significant amount less than a reasonable daycare costs, this is very short-term thinking).

However, before you call your real estate agent, there are some things you should consider. Even if you are able to find a cheaper home, you need to factor in other costs associated with moving. And I don’t mean the moving truck and pizza and beer for the friends who help you move. But all the ongoing costs that you will incur because of living in a different location, (and not to mention the non-financial factors like amenities and quality of local schools etc).

For example, say your current rent is $1,500/month. You find a place thats $1,200/month and that amount puts you under the 40% threshold. However, you now need to get a second car because the new place doesn’t have public transit close by. Say that it will cost you $300 for a car payment and insurance. So essentially you are in the same financial position because your new car payment and insurance become essential costs.

If you are still under the 40% threshold when you delete your income, great. Now lets consider your other budgets. You have to be realistic. You can’t cut your grocery budget from $800/month to $500/month and expect to stick to it unless you drastically change the way and what you eat. Similarly with utilities – if someone is at home all day, heat, electrical and water will all go up.

Same goes for your “Life” budget. If you have barely any money left over for life, this isn’t reasonable. I constantly hear from moms who think that they can live for free (The library has free activities! The park is free!) but forget that their children will still need clothes and WILL persist in growing out of them, that they will want to play soccer and go to the movies. That birthdays, Christmas will still require presents, washing machines will break, and pets will need to go to the vet . Make sure that you have at least 15-20% of your after tax income available to you for Life.

Next, are you still able to save for the future? I recommend that 20% of your budget goes towards debt repayment and savings. And I feel like once you have children, it becomes THAT much more important to have a good safety net in place.

However, if you are just planning on taking a couple months off for maternity leave (or even the full year) and not making an RRSP contribution for a few months is what will help you pay the bills, I don’t think its a big deal. But if you plan to be a stay-at-home mom permanently, skimping on savings or debt repayment is completely irresponsible.

Step 3 – Make sure your partner is on board

Losing an income and reducing your budget, even if manageable, will require a change in lifestyle. You need to sit down with your partner and make sure that they are on board. You may think that cutting the gym membership, canceling cable and not taking any more vacations is a small price to pay for being able to stay home with your kids, but your partner may not, or at least may not in the long run. Make sure that this is a decision you are making TOGETHER and its not something that YOU want and THEY are giving you. You don’t want them to resent being in a tighter financial situation or the burden of being the single income earner because this will eat away at your relationship. And you don’t want to be in a position where they can hold it over your head with “I make the money, so I get the final say” on every decision going forward.

Step 4 – Start planning – and saving – now

If you run the numbers and it really looks like you won’t be able to afford to be a stay-at-home mom, don’t despair. This is still a possibility, it just may not be one right away. But the sooner you start planning (and saving) to take time off, the better.

Start brainstorming ideas to still contribute financially – perhaps you can work part-time, get a direct sales job or do some free-lance work if you are able.

Also, look into seeing where you can cut costs. Can you reduce your insurance premiums? Lower your cell phone plan? Stop getting your hair highlighted? If it is important to you to stay home there are some easy sacrifices that you can make that won’t impact your life as much but can be the difference in making becoming a stay-at-home parent a reality.

If you are pregnant, try living on just one income plus what you expect to get while on maternity leave and bank the rest or use it to get the essentials for baby. Is it doable? Easier than you thought or downright impossible? If you have already had your baby or your child is older, do a trial run. See if you can live off one income.

Step 5 – Be flexible and be aware

Spending time with your children is a precious and really, a priceless thing. But the end of the day it is good to be aware of what a major life decision like becoming a stay-at-home mom really means. Some people are ok with going into debt in order to take the whole year of maternity leave. To be honest, I judge this less than someone who goes into debt to buy a luxury car, renovate their kitchen or go on an all-inclusive vacation. Just know what you are getting into and make a plan as to how you will manage it.

But also be open to some compromise. Maybe you can’t afford to be a stay-at-home mom until your kids are in school but maybe you can for their first two years of life. Maybe you can’t take the full year of maternity leave with your first child but perhaps if you plan accordingly, you can with your second.

Lastly, and this is something that I know from experience, whether you end up staying at home or not, remember its the quality of time and not the quantity of time that you spend with your children that really counts.

The Wonderful World of Maternity Leave

April 14, 2014April 14, 20144 Comments

Ah, maternity leave. If you are pregnant or thinking about becoming pregnant and you live in Canada, this is a post is a must-read.

I remember when I was pregnant with my first son, I was so excited to go on mat leave. I felt so blessed to live in a country where I was guaranteed a year off from work (I hated my job, so I was really excited by the idea of being away from it for a year) and that I would actually still make some money not working (until I discovered that parenting is incredibly hard and that mat leave is a pittance for the amount of work I did).

I also soon discovered that its actually all quite complicated. I had a lot of questions from the most important (how much money will I actually get) to practical (how to I actually get it). To make this user friendly, I’ve decided to do this in a question/answer format.

However, I do want to preface this by saying that this is MY experience and that while I do reference the Service Canada website, I am human – I may interpret some things incorrectly or they may not apply to your situation. PLEASE always confirm and verify everything with Service Canada before you act! I hope this post gives you a good idea where to start and the types of questions to ask, but in the end, the ultimate responsibility is yours.

Now that the legal mumbojumbo is done, here are some questions to ask about maternity leave.

1. What is maternity leave?

2. How much are maternity leave benefits?

3. Am I eligible for maternity leave benefits?

4. Can I work while on maternity leave?

5. How do I apply for maternity leave benefits?

6. What else should I know about maternity leave?

1. What is maternity leave?

Maternity leave is a period of time that all employers in Canada HAVE to give you – they legally have to hold your job or one of equal status and pay for you for up to a year – so that you can take care of your newborn baby or adopted child.

In Canada, when women take maternity leave they are entitled to certain benefits, which fall under the Employment Insurance (EI) program. It is a monetary benefit that you can claim when you are pregnant, have recently given birth, are adopting a child or taking care of a newborn. This is a benefit that is provided at the federal level for all provinces except for Quebec, which has its own maternity/parental leave program. I only discuss the former.

The monetary benefit is broken up into two parts: Maternity Leave and Parental Leave.

Maternity Leave benefits are paid for a maximum of 15 weeks and only to biological mothers, including surrogate mothers, who cannot work because they are pregnant or have recently given birth. The 15 weeks can start as early as eight weeks before the expected date of birth, and can end as late as 17 weeks after the actual date of birth.

Parental Leave benefits are paid for a maximum of 35 weeks and can be taken by biological or adoptive parents.

So this means that only the biological mother can claim the first 15 weeks of leave benefits but either the mother or the father/other parent can claim the parental leave benefits. The mother can, of course, take all 35 weeks of the parental leave, which combined with the 15 weeks of maternity leave is what makes that 52 weeks or year that everyone talks about.

Things to note about the 35 weeks:

Both maternity and parental benefits are the same even if you have multiple births (like twins) or adopt more than one child at a time. So you don’t get any added benefit for having more babies (sucks, I know since its that much more expensive).
If one spouse decides to return to work after taking a few weeks of parental leave, but then realizes a few weeks later that he or she would prefer to stay home with the child, he or she is still entitled to the unused weeks of parental benefits, as long as the 52-week period after the birth or adoption placement has not expired.
Like I said, the mother can take the entire 35 weeks or can share any portion with the father.
Both parents CAN take the leave at the same time (which we actually considered by realized we couldn’t afford).
If your newborn or newly adopted child is hospitalized, the 35-week timeframe can be extended by the number of weeks your child is in the hospital

2. How much are maternity leave benefits?

Honestly, not that much. I think many people are unpleasantly surprised by how little they actually are.

Ok, here we go. If you are eligible to claim them (see below where I discuss eligibility), the basic rate for calculating EI benefits is 55% of your average insurable weekly earnings, up to a maximum amount. As of January 1, 2014, the maximum yearly insurable earnings amount is $48,600. This means that you can receive a maximum amount of $514 per week which works out to about $2,227 per month. This amount, though, is taxable, so the net amount is actually less (and this depends on the province you live in). For example, for Ontario, that would be about $452 per week or $1,958 per month. I like this website for helping figure out the net amount. Remember to put in 55% of your gross annual income, so if you make $48,600 or more per year that would be $26,730 for the purposes of calculating your benefit.

Now, this is the MAXIMUM. If you earn less than $48,600 per year then you need to do the math. This might also be the case when, although your salary is over $48,600, you actually earned less in the 52 weeks before you go on leave.

So say you earned $40,000 in the 52 weeks before you go on mat leave, the calculation would be as follows:

$40,000 x 55% = $22,000 per year

$22,000/52 weeks = $423 per week less tax based on the province you live in.

The only exception is if you qualify as a low income family – i.e. your net family income is less than $25,921. In that case you can get an EI supplement based on your income and the number of children you have.

Also, just a quick note – usually the maximum salary amount is increased each year. However, the benefit you get is based on the year you give birth and doesn’t change if you leave takes place in two calendar years. So for example, if you had your baby in December 2013 and qualify for the maximum benefit, you will receive a slightly lower benefit amount than someone who gave birth in January 2014. Its not going to be a huge amount, but its something to keep in mind when making your mat leave budget.

3. Am I eligible for Maternity Leave & Parental Leave Benefits?

In order to qualify for Maternity Leave and Parental Leave there are some requirements you have to meet.

You are employed in insurable employment and have been paying your EI premiums (this is usually deducted straight from your pay cheque). So, if you are a stay-at-home mom or have job where you don’t pay EI, you won’t get it.
You are the biological mother (for Maternity Leave Benefits) and biological or adoptive parents (for Parental Leave Benefits). So this excludes, for example, grandparents, if they wanted to take leave from their jobs to care for your baby.
Your normal earnings are reduced by 40% or more due to having to care for your baby or adoptive child.
You have accumulated at least 600 of insurable employment over the past 52 weeks before going on leave or since your last EI claim (say you were unemployed and claiming EI 6 months before you went on leave), whichever is less.

4. Can I earn money while on Maternity Leave?

The answer to this question is: yes and no.

While you are receiving Maternity Leave benefits (i.e. the first 15 weeks that can be only taken by the biological mother), the government will deduct the entire amount you earn dollar for dollar from your benefits.

While you are receiving Parental Leave benefits, you can earn up to $50 per week or 25% of your weekly benefit, whichever is higher. The government will deduct any money earned above that amount dollar for dollar from your benefits.

Its a bit of a pain though, because if you do earn income while on leave, you need to fill out a report every 2 weeks detailing how much you made. So say you selling something on the side, like Arbonne or Mary Kay, you need to figure out an approximate profit for that period (and profit is NOT the same as commissions). Its easier if you work somewhere and get paid by the hour, but its still annoying to have to fill out that report.

This is a topic which really annoys me. No, not because I think its a “precious time to be with your baby and how could you think about working” but because I wish the government would let parents supplement their income while on leave without being penalized for it. I know the point of the benefit is to help parents financially so they can care for their baby but there are many ways to be able to care for your baby most of the time and still make some money on the side. A family’s expenses don’t go down when they have a baby – if anything, they go up. And there are so many side jobs one can have to earn a bit extra to help maintain a certain standard of living or avoid going into debt that can be done all while maintaining excellent care over the baby. But the government seems to be taking note of this and have launched a Working While You Claim project which will allow people to earn a bit more income while claiming EI benefits (of which Parental Benefits, but not Maternity Benefits, will be included).

I will do a post on working while on mat leave though. I think there are creative ways to earn some income and still take advantage of being on maternity leave.

Also, please note that there are certain types of income that don’t affect your maternity and parental leave benefits, such as disability benefits, employer top-ups and others which can be found on the Service Canada website.

5. How do I apply for Maternity & Parental Leave benefits?

You apply for both Maternity & Parental Leave benefits online. You can find everything you need to know here.

Just remember, this is a government program and so of course it takes time and requires a lot of information and documents. Check out the link above to make sure you have everything you need ready to go so you aren’t scrambling for it while trying to deal with the sleep deprivation you will have while taking care of a newborn.

6. What else should I know about maternity leave?

I’ve touched on the most important parts of maternity leave benefits that are provided by the government. But there are a few more things to consider regarding maternity leave.

Employer top-ups. Your company can give you a top-up (an amount over an above your EI benefit amount) that does not reduce your benefit. While this can be an amazing benefit, make sure to read the fine print. Many companies that offer this benefit often obligate you to return to work after you maternity leave for a specific period of time. For example, the firm where I worked topped up my salary to 100% of my salary for 17 weeks, but I was obligated to work for them for a full year after my leave or be required to pay back the top-up on a pro-rated basis. If you don’t plan to return to your old job (whether it is because you decided to stay at home with your child or simply get a different job), keep this in mind.
You can continue to receive maternity and parental benefits even if you leave Canada – this is different from regular EI benefits. This is good to know as many people like to take the opportunity to visit family and friends abroad during their leave.
If you don’t want to share you 35 Parental Leave with your partner, they can still take up to 35 weeks of unpaid Parental Leave and be covered by the same laws as you regarding job security. This may be an option for those who want their partner or spouse to take some time off to be with the baby, but don’t have enough vacation time or don’t want to use it.
While you are entitled to take a year, don’t feel you have to or feel bad if you can’t. Realistically, not everyone can afford to have their income so drastically reduced for such a long time and not all parents want to be off work for that long. I, personally, hated my job when I went on leave, so for me it was a great escape and took 11 months with my first son. If I had loved it, I probably would have taken less. Its a choice you have to make together with your spouse or partner and don’t let anyone make you feel bad about it. I will also do a post on tips on how to be able to afford your maternity leave and how best to prepare for it.

For complete information on Maternity and Parental Leave Benefits, visit the Service Canada Website.

A modern mommy's guide to managing money

Mommies & Cents

Category: Baby