Having a baby

Good news also brings changes to the family’s economy. In addition to the necessary purchases, buying a new car, for example, and more space for living may be necessary. We have put together a list of considerations when you are preparing for a new family member.

  • 1. Find out your income level during parental leave

    1. Find out your income level during parental leave

    Remember to apply for a maternity grant and allowance from Kela. You can select the maternity package or a tax-free cash benefit. Also notify your employer of the forthcoming parental leave sufficiently in advance.

    The duration of the maternity leave is approximately 4 months, and the mother can start it 1–2 months before the expected time. For slightly more than half of the maternity leave, the amount of the maternity allowance is 90% of the work income, with 70% of the work income paid for the rest of the leave.

    The maximum paternity leave is approximately 2 months. During the paternity leave, the father will receive a paternity allowance from Kela at the amount of 70% of the work income.

    The duration of the parental leave is approximately six months and it is to be taken after the maternity leave. Usually the child is approximately 9 months of age at the end of the parental leave. For the parental leave, a parental allowance is paid at the amount of approximately 70% of the work income in most cases.

    After the parental leave, the mother or the father can take care of the child at home and receive child home care allowance until the child turns 3. Home care subsidy consists of home care allowance and supplement. The home care allowance is  €340 per month per a single child under 3 years of age. The amount of home care supplement depends on the income of the parents. In addition, your home municipality may pay a municipal supplement. The daycare fees for children can be found on the municipality’s website. (www.kela.fi, 12/2016.)

  • 2. A good standard of living also during parental leave

    2. A good standard of living also during parental leave

    Parental leave is a unique time in your life. You can enjoy the time with your child, if you plan your parental leave in advance.

    If you still have time until the leave starts and have extra money available after compulsory expenses, prepare for the parental leave by saving money.

    If you have a housing loan or, for example, loan for a car or summer cottage, you can apply for an instalment-free period for these loans. With the instalment-free period, your economy becomes more flexible during your leave. You can apply for the instalment-free period in eBanking. The instalment-free period is subject to a favourable decision by the bank.

    Have you not had time to prepare for the parental leave by saving? No worries. Dream Loan may enable you to finance your living during the leave.

    Dream Loan: Read more 

    For each child, Kela will pay a child benefit until the end of the month in which the child turns 17. The child benefit does not depend on the income of the parents.

    Kela.fi: Read more

  • 3. With more family members, the expenses will grow

    3. With more family members, the expenses will grow

    As the child grows, so do the expenses. One child increases the consumption expenditure of a family by approximately 15% (www.kela.fi, 12/2016). It is good to think about the economy of the family as a whole and be prepared for situations where the current situation needs to be rethought.

    For example, the space in your current home may get crammed and you may not have enough rooms with the growing family. Suddenly, even the area where you live may seem impractical. Buying a new home may be a solution to the space problem. However, this requires that the economy of the family can undergo great changes because of the changed cost of living.

    Perhaps the family has previously made do without a car or with only one car. With the new family member, you may find the need for a car or second car. You can buy the car either using your savings or financing. Carefully study the different options.

    If you do not have the time to build up a reserve fund for these purchases, you should carefully consider the different financing options. A credit card brings flexibility to purchases and, on the other hand, your home credit has the possibility for an instalment-free period, which allows you to spend money otherwise committed to the loan repayment on other purchases.

  • 4. Be prepared for the growth of your child

    4. Be prepared for the growth of your child

    The earlier you start saving, the more the money can accumulate interest on interest – and the larger the amount grows. When saving for a child, the time span is long but, at some point, the time will come when the saved money could be spent on a driving license or, for example, even buying a first home. Take the time to stop and think when you start planning the future of the child and his or her adulthood and independent life.

    Many parents have found that it is a good practice to donate the child benefit to the child. For such saving, the Golden Piglet account or various funds are an excellent choice. If it is not possible to save the child benefit in its entirety, put aside that which you can. 18 years is a long time and, when it comes to saving, time is your friend.

  • 5. Sort out the family’s insurance coverage

    5. Sort out the family’s insurance coverage

    During the first years of a child’s life, plenty of good things will happen but there may also be unpleasant surprises, such as illness or accidents. You can consider whether to get an accident insurance policy for the child or also coverage for medical expenses.

    At the same time, it is advisable to revise the coverage of your own insurance. In case anything should happen to one of the parents, it is good to secure the financial safety of the child and the other parent.

    It is advisable to have a life insurance policy to support your partner, particularly if you have shared loans. With the insurance, the family may be able to live in the shared home and there is no need to take care of the loans while mourning.

    Learn more about Loan Insurance: Loan Insurance

Checklist for those planning parental leave

  • Apply for maternity benefits from Kela. You can select the maternity package or a tax-free cash benefit.
  • Use our calculator to prepare an estimate of your income level during the parental leave. Based on the information you provide, we will tell you how you can financially sort out your leave.
  • Notify the employer of the parental leave sufficiently before its planned start. Apply for maternity allowance from Kela
  • Get the necessary supplies for the child and make preparations at home well in advance so that you can concentrate on the new situation after the birth.
  • Take out an insurance policy for the child. You can get the coverage even before the birth.
  • Consider whether you will need a new home or car.
  • You can also think of ways to reduce your fixed expenses during your leave. One child increases the consumption expenditure of a family by approximately 15%.