Finance

Maternity Leave Without Pay for Self-Employed

July 20, 2021

There IS good news for parents who run their own businesses and worry about not having paid parental leave. You can take the power into your own hands and create a paid leave for yourself! Although it will take some planning ahead and a bit of discipline, if you are currently employed you can fund your own leave. Here's where to start with your business and four ways to fund maternity leave without pay for self-employed parents.

How much money do I need to fund my leave?

There’s no way around it - if you want to have a fully funded maternity leave, you’ve got to know how much funding you need. Your budget is about to become a good friend, even if you haven’t loved keeping one before.

First, a clear idea of what your personal expenses are each month is necessary. This can be done first by writing down your known expenses/bills. You’ll want to include your fixed expenses that are the same each month, like rent or mortgage payments, utilities, etc; as well as your variable expenses that change each month, such as travel costs, eating out, grocery bills, etc. It will be helpful to track your spending over an entire month to get an even more specific picture of how much you will need to save. To get an even better idea of your average spending and needs, look back at your bank and credit card statements for the past 3-6 months.

You can cut things from your expenses as you prepare for your leave, and you probably should. You can also consider how your expenses will change once your baby is here. To help you figure out how much money you need to save for your leave, download our free template the Parental Leave Budget Worksheet.

What about my clients?

Maternity leave without pay for self-employed parents also means that you need to have a business or clientele to come back to. This means that you will need to determine how you will step away or keep things running during your leave. It is important to be really honest with yourself here. Maternity leave for the self-employed can quickly turn into weeks of stress when a parent hopes they will fit work in during naps or evenings.

When I was pregnant with my first child, someone offered the advice to me that babies sleep a lot and I could get my work done while they slept. In theory it’s a nice idea, but in those early months of parenthood I needed to be taking care of myself when the baby slept, as well as sleeping myself! You’ll never regret setting up a 3-6 month parental leave for yourself. Baby care is a full time job!

What are your options?

Hiring help

Are there areas of your business that you can keep operating during your leave with a bit of help in order to keep a trickle of funds coming in and your clients happy? Even if hiring someone cuts into your income, it may be worth it to have some money coming in. If you plan far enough ahead, you will add to this income the fund you will establish before you stop working. The end result? A relaxing and nourishing maternity leave.

Start by making a list of tasks that you can train someone else to do. If you provide services, can you hire someone else to take your appointments for a few months and split the cost?

For example, when I was pregnant with my second child I was running a team of 60 independent contractors for a doula agency. I knew I wouldn’t be able to manage the clients and doula team while I was on maternity leave, so I hired and trained three part time assistants to fill my role. It was one of the best decisions I’ve ever made in all the years of running my business. Heading into the final weeks of my pregnancy and upcoming birth with the knowledge and security that other people were handling the day-to-day operations of my business was a huge relief.

Taking a sabbatical

Many of us provide services that are simply too unique to our own skillset to outsource. While we may be able to hire a VA to help with some admin, without showing up ourselves, there isn’t a business. This might be what makes your business so special!

With the right amount of planning it is possible to step away from your business for maternity or parental leave. It will mean doing a lot of communicating with your current clients and providing the type of service before you leave that will get them excited about your return. If you would like more support on how to plan for a self-employed sabbatical contact me for information on my one-on-one programs. You can also read the client highlight posts of Erin, a yoga therapist, and Claire, a holistic fitness coach on ways they set up their practices for maternity leave.

Maternity leave without pay for self-employed parents: 4 funding options

After you have a clear idea of how much money you will need to pay for your maternity leave, it is time to start exploring your options.

Don’t let your current financial situation limit you here. It is important to think outside of the box, get creative, and be open to trying new things. Here are four ways to fund your leave to look at first.

Savings plan

Creating a savings plan is a great way to take charge of taking maternity leave without pay as a self-employed parent. It is especially effective if you can commit to it for nine months to a year, though I have had clients see great success with much less time once they figure out the details.

Resources

Existing savings/emergency fund

The first place some parents may want to look for funding maternity and parental leave is their existing savings. One way to begin is to look at how much you will save between now and your leave combined with how much you can pull from what is already there.

Increase income/revenue

How can you increase your income for the next six months to a year? And even as important, can you put the extra income aside for your fully funded maternity leave?

If you have been running a business a certain way for a while it can be hard at first to see what you can do differently to bring in extra income. Try not to get stuck in any certain way of thinking or attached to your previous beliefs around how you bring in money. Now is the time to get creative!

Here are some resources to get you started:

Community Fund

Maternity leave without pay for self-employed individuals is an issue that most people in industrialized countries don’t face. Not so much in the United States! Many parents in the U.S. are becoming more aware of the value of the time spent with new infants and are crowd-funding their leaves.

A community fund for maternity leave and parental leave is now an option for many gift registries, and it is becoming another common option for supplementing the time away from work after a baby is born.

Creating a place to store your maternity leave or parental leave fund

Now that you know how much you need and how you are going to get it into your account, the next thing to explore when combating maternity leave without pay for the self-employed life is to determine how you will store the cash. I highly recommend a high-yielding savings account. These types of accounts give you the best bang for your hard-earned buck and will also help you to keep your maternity leave funds separate from the other accounts that your family uses.

There are a lot of great options, and your bank may have one that you may love. Check out this list of the eight that NerdWallet ranks as the best here.

More resources to help you fund your maternity leave without pay as a self-employed parent:

The parental leave assessment

Access my resource library

How to save money for parental leave as an entrepreneur

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Are you looking to create a strong financial foundation and are ready for guidance on your next steps? We help parents, self-employed people, and W-2 workers just like you with a variety of financial projects like: debt management, student loans, spending and savings plans, separating business and personal expenses, planning a parental leave, savings for retirement, learning about investments, and more.