The True Cost of Motherhood: 89% of Women on Unpaid Maternity Face Financial Hardship

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Having a baby should be a joyful time, but for many mothers, the experience can lead to financial hardship. That’s because only 17% of American workers have access to paid parental leave, according to the latest data from the Bureau of Labor Statistics. That means that many mothers are forced to take unpaid leave at a time when they’re dealing with added expenses, from medical bills to baby supplies.

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Breeze surveyed 1,000 American women who went on unpaid maternity leave at some point during the last year to find out how they fared financially.

The Financial Consequences of Unpaid Maternity Leave

Among the women who took unpaid leave and did not have short-term disability insurance (35% of those surveyed did not take out short-term disability insurance prior to their pregnancy and leave), 20% dug into emergency savings to help cover costs, 17% took on credit card debt and 9% took out a personal loan. In addition, 11% ended up working during their leave by taking on a side hustle.

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Overall, 89% of women on unpaid leave without disability insurance were unable to cover costs comfortably during their time out of work. This means that many had to delay financial milestones: 34% delayed paying off student debt, 32% delayed buying a home, 26% delayed building a retirement fund and 29% delayed buying a car. Putting off these milestones can have financial consequences that can be detrimental for a growing family.

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“The long-term repercussions of putting off financial milestones is that it will likely cost you,” said Mike Brown, director of communications at Breeze. “For example, if you put off paying off debt, then interest is just going to accumulate and you’re going to end up owing more than you initially did. Or, if you delay buying a house, maybe mortgage rates go up or the market goes up in general, so you may wind up paying more for a house than originally expected.”

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How To Prepare for Unpaid Maternity Leave

Although disability insurance can help women stay afloat during unpaid maternity leave — 65% of mothers who took out a short-term disability insurance policy before pregnancy found “adequate financial coverage” from the policy — if you apply while you’re already pregnant, it’s too late.

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“You must do this before getting pregnant because usually when you apply while pregnant, the insurer will count it as a pre-existing condition and it won’t trigger a benefits payout,” Brown said.

That means you’ll need to make other preparations to be financially prepared for unpaid leave.

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“Before going on unpaid maternity leave, women can start to budget accordingly,” Brown said. “If you know you’re going on unpaid leave, set up automated savings so that you regularly set aside some money each week or every other week, and by the time you go on leave, you’ll have a decent amount of savings built up to cover your expenses.”

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 

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