Family life

How To Budget and Prepare for Parental Leave

You’re not ready for parenthood until you’ve considered how you’re going to pay for it.

How To Budget and Prepare for Parental Leave

Jacqueline Ozdemir

Becoming a parent is exciting, life-changing and filled with joy and love. It also comes with its fair share of responsibilities and financial challenges—something I can appreciate as a financial advisor and a mother of two young girls. Budgeting for parental leave and part-time work requires planning but if you follow these practical steps, it can be easier than learning how to swaddle.

Depending on where you live, you may be looking at anywhere from a few weeks to 18 months of parental leave. And, depending on your employer, you may have parental leave benefits or top-ups. Regardless of your situation, your income is likely to change, which will impact how you cover your family’s expenses.

To pay for your new lifestyle and family, you’ll either want to save up prior to your leave or scale back your expenses while taking time off. Life is expensive these days so saving up enough to cover your income for your time off may not be an option, but rethinking your expenses is always a good idea.

Review your income sources

First, assess your current situation and create a budget. Start by taking inventory of your family’s income sources, including salaries as well as any passive income you have coming in, like interest from investments.

This will tell you how much you need to replace when you are on parental leave. Next, take a look at what your income will look like when you go on parental leave and how much it will change.

Determine your expenses

Next, start outlining your expenses. Categorize where your money goes each month. An easy way is to start with three categories of expenses: fixed expenses, variable expenses, and discretionary expenses.

Fixed expenses are predictable expenses, like your mortgage or rent, property and real estate taxes, insurance premiums and car payments. These don’t tend to change and should be fairly easy to track. You can start by looking through your online banking statements or credit card bills.


Variable expenses may include things like groceries, gas, clothing, and household items. These are costs that you may incur each month, but the amounts vary and are not as predictable. These expenses are still very important, but may have some flexibility in terms of cost, and therefore can be a little harder to budget for.

The third bucket is discretionary spending. These can include things like dining out, entertainment, memberships and subscriptions. What is important to everyone is different, but if there is a group of expenses that needs to be cut down, these might be it.

woman sitting at a table with a computer and holding money iStock

Create your budget

Now that you know the three different kinds of expenses, start to create your budget. When my husband and I first started this exercise over 10 years ago, we used an Excel spreadsheet. It was effective, but logging everything manually was inefficient and time-consuming.

Since then, we’ve switched to an online tracking app to consolidate and categorize all our expenses across all of our accounts. There is no shortage of apps and tools available. Some apps link to bank accounts and some are provided directly through your online banking app.

The key is to find something that categorizes your expenses and gives you a good view of where your money is going. If you are using a new app, just be sure to double-check the reviews and security measures to ensure your information is safe online.


No matter how you do it, take a look at how you’re spending your money. Ideally, try to look at more than one month. I recommend looking at how your spending trends over at least a three-month period. Keep in mind, months like November and December may be very high spending months, whereas January and February tend to be less.

As you’re going through this process, be truthful with yourself. Put down what you are actually spending, not necessarily what you think you should be spending (which is probably less). It’s important to have a realistic view of your finances.

Decide what to scale back

Remember those discretionary expenses? Start with those. When I went on parental leave, I knew that I wouldn’t be going to the gym during at least the first six weeks postpartum, so instead of paying for my gym membership during that time, I put it on hold.

Look at costs like subscriptions—to streaming services, podcasts, anything online. If you subscribe to multiple streaming services, for instance, consider committing to just one for a few weeks or months as an opportunity to save money.

Once you’ve looked at your discretionary expenses, move on to your variable expenses. It’s possible some of the savings will come naturally. For example, you may not spend as much on gas if you’re not commuting to work anymore. Grocery costs are also another area that offers the potential to save money.


Meal planning is a great way of making the most out of your grocery budget. Plus, it helps save the last-minute “what’s for dinner?” dilemma each day and keeps food from going to waste in your fridge.

For parents who may be up at odd hours of the night, I get it: you’re tired and it's tempting to want to order food. On days when you have the energy, prepare meals so they are available on days you don’t have the energy to cook. And trust me, when you’re tired and hungry you’ll learn that almost anything can be frozen and reheated again and taste just as great.

Another area to really think about is clothing, not for you but for your baby. Having gone through this twice myself, I’ve learned that friends and family are always happy to pass along used clothing and are keen to get it out of their own homes.

Used clothing stores are also great places to pick up items and save a ton of money. If you need to purchase a stroller or playpen to keep at a grandparents' home, consider buying it second-hand. These items likely won’t be used as often, so there’s no point in breaking the bank. (Just be sure to check they are safe and items have not expired when purchasing second hand.)

author jacqueline and her her husband and two daughters Jacqueline Ozdemir

Save some money for the little things that make you happy

And while it’s important to cut back, that doesn't mean everything. One of my favourite things to do during my parental leave was go for a walk with my baby and grab a coffee from a coffee shop. This would fall under discretionary expenses, but sometimes it’s the little things that keep us sane and happy during this busy time of life.

Check back in


Check your budget a few times a month so that you know if you are overspending. My husband and I also take a half hour every month to sit down together and reconcile our budget at the end of the month. We make sure to review how things went and how we’re trending over the past few months. Doing this has given us peace of mind knowing that we are in control, and it has eliminated negative feelings around money.

Budgeting and preparing for parental leave can feel like a daunting task. But with some discipline and creativity, you can successfully get through this phase. And in doing so, you’ll set yourself up with the tools to better manage your money, be more in control, and sleep easy at night (as much as you can with kids, at least).

Please speak to your financial advisor to discuss your particular circumstances prior to acting on the information above.

The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.

Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.

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