If you are starting a family - or adding to one - where you live makes a substantial difference in the type of parental leave you will be awarded. A recent study released by the Center for Economic and Policy Research ranked 21 of the world's high income countries based on parental leave policies. (For related reading, check out The Costs And Rewards Of Parenthood.)
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Germany and Sweden tied for the number one spot in generosity of paid leave; if you have a baby in one of these countries, you will be eligible for 47 weeks of paid leave to take care of your newborn or adopted child. Sweden and Finland ranked number one and two, respectively, for gender equity in parental leave, meaning that it's not just the mother who will be able to take a paid leave to care for a child.
Living in the U.S.A.
If you live in the United States, however, parental leave policies fall far behind. In fact, there is no mandate requiring employers to provide new parents with any type of paid leave, and only certain workers are eligible for the 12 weeks of unpaid leave provided by the Family and Medical Leave Act.
Having a baby or adopting a child is expensive, and the financial strain is only magnified when one parent decides to (or must, depending on circumstances) stay at home to care for the child. Many parents must make difficult choices to determine if they can afford to take a parental leave, weighing their financial needs against the desire or need to care for and bond with a new child. Parents are left wondering if they can afford a parental leave - or if they can afford not to. Here are some considerations. (For more on saving for a baby, check out Budgeting For A New Baby.)
Actual Lost Wages and/or Benefits
Depending on the situation, parents of new children may have paid leave, unpaid leave (for a specified time period and with a guaranteed job upon return) or no leave. Paid leave is, of course, the best since it allows workers time to care for a new child and adjust to having a new child, without the loss of income or fear of losing a job. Unpaid leave gives parents time to care for a new child, with a predictable and finite loss of income (number of days times daily wages). Parents who lose a job because their company offers no type of parental leave risk being out of work for an indefinite period.
Some parents may choose not to take advantage of available parental leave benefits because of the fear of career repercussions. Workers can feel pressure to put their careers first and can be chastised (or punished) for wanting to spend time with a new family member. They can be made to feel like they are not serious about their career if they are willing to put it on hold. Both men and women can feel these workplace pressures which can stem from both colleagues and management, though society tends to be more accepting of a woman's parental leave (often called maternity leave).
The average woman in the United States has her first child when she is 24.9 years old. This means that a career woman may already have four or five years of a career underway when the first child arrives, and may be eligible for advancement and pay increases. Taking an extended leave to care for a child can create a loss of momentum in career advancement for both men and women. In addition, research has shown that as far as salaries are concerned, mothers are penalized where fathers actually benefit due to cultural expectations for them to be the breadwinners for their families.
Despite the financial stress and any workplace and career repercussions, staying at home to care for a new child brings obvious rewards, including bonding with the child, adjusting to a new routine and having an active role in the child's life. But taking an extended leave can be a gamble for one's career since it can be difficult to simply pick up where one left off, but for some the risk is worth it.
Balance the Loss of Income
When a parent does decide to take an extended leave to take care of a new child, there are ways to balance the loss of income. If another parent is in the household, he or she can try to negotiate a raise, or pick up an extra shift. Recurring monthly expenses can also be reduced, such as canceling cable or movie packages, or eating at home an extra night. Even though eliminating or reducing expenses typically does little compared with an extra salary, it can provide at least a small break in financial obligations while a leave is taken. (For related reading, check out 5 Ways To Save On Child Care Costs.)
Even if you live in a country like the United States or Australia with practically non-existent parental leave rights, employers are becoming more and more aware of the need for workers to have the flexibility to raise families. With the high costs associated with employee turnover (to cover necessities such as recruitment and training), it pays for employers to keep employees happy - and that means allowing generous parental leave benefits.
The Bottom Line
Finding a healthy work/life balance is a challenge for most people starting or adding to a family. Aside from the obvious financial hardships, taking an extended parental leave can, unfortunately, have unwanted workplace and career consequences. Determining if you or your partner can afford a leave requires an honest look at your current financial situation, and an objective evaluation of your future opportunities.
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