Taking a career break to care for children is a big deal. If not managed wisely, it can have a profound affect on your finances and dreams for the future.
Australian Bureau of Statistics data reveal that in the 2017 financial year 95 per cent of Australia’s primary parental leave, used by non-public sector employees, was taken by women.
Conversely men took 95 per cent of secondary parental leave.
While these figures show that women take more career breaks when it comes to caring for children or loved ones, other statistics suggest that this trend is slowly starting to shift.
We know that as an increasing number of women move into full-time employment, we are also seeing an increase in the number of men opting for part-time work.
The pace of full-time employment growth among women rose by 4% in 2018 and has outpaced men (+2%) in the 12 months to October 2018, according to the Financy Women’s Index.
By contrast, part-time employment growth among men and women grew at the same pace by 2% in 2018.
As workforce norms change, the need to manage household finances is likely to change too, particularly when it comes to career breaks.
Here are ten real life things to consider before taking a career break to have children, including how your finances could be affected and how to manage the impact of that.
Suggestion: Consider reviewing the family expenses and doing a budget before having children. Work out if additional income can be earned without placing a strain on the pending career break, or if some financial sacrifices need to be made. Once kids arrive on the scene, it may also be time to review your own lifestyle spending choices. Ask yourself, what can you do without, and what can you not. What does time allow for these days, for example; a movie and meal at home on Friday nights, rather than going out on the town and calling a babysitter.
Suggestion: Start an emergency savings account and/or an education savings account that allows you to earn interest and get a jump-start on the expected costs to come.
Suggestion: Do your research on what you need. Then consider how much money is needed to make an upsized purchase happen. If it is out of budget, consider a loan or other financing arrangement, or indeed set a timeline and goal for achieving a deposit or the item, and save towards it.
Suggestion: If you intend on returning to work, the best thing you can do while on a career break is not drop out altogether. Stay up to date with trends, or plan ahead for supportive ways to re-educate yourself when the time arrives to return to work. Also where possible, take the time to work with your employer on your career ambitions. Be bold and ask for what you want, rather than holding back out of fear.
Suggestion: Again where possible take the time to talk with your employer about what the career break means for you and your earnings. You may even discover that the break presents you with an opportunity to re-education yourself or explore something new like your own business project.
Suggestion: Take some time to really think about what is going to work best for you and your new way of life. If you’re not clear about the best way forward, or are even nervous about it, perhaps test a new work arrangement first before ruling it out completely.
Suggestion: Update your estate affairs before or soon after your career and financial circumstances change to ensure that the appropriate protections are in place.
Suggestion: Talk to your employer about what benefits you may be entitled to or perhaps be able to negotiate while taking your career break. For example, consider asking for super payments while on paid parental leave or even start to salary sacrifice into your super ahead of your pending leave as a way to build your balance. Also where appropriate, consider talking with your partner about a super splitting arrangement, so that both of you may be able to take advantage of the tax benefits and keep your savings pool growing.
Suggestion: Review your insurance policies and make sure that your details are up to date; including your earnings and that they are relevant to your circumstance.
Suggestion: Take some regular time out for you, and try to carry that through while on a career break. Your mental and physical health need to be prioritized, because if you are not functioning, then it will become increasingly difficult to care for those that you love.
Once you understand some of the realities of taking a career break, it then becomes easier to plan for the impact and move into that phase with a more informed and optimistic frame of mind.
This Financy article was first provided to AMP and has been republished here with permission.