Surviving A Lower Income On Maternity Leave In Canada (2024)

Estimated reading time: 8 minutes

On a low income, surviving maternity leave in Canada can be tough for new parents.

However, there are ways to stay on top of your finances.

Surviving A Lower Income On Maternity Leave In Canada (1)

Struggling Financially On Maternity Leave

Most parents-to-be struggle with living on a lowered income, or some put off having a baby altogether for fear they can’t afford a child.

I survived two pregnancies and two maternity leaves and made it through the after-baby financial changes to our net income.

Strangely I have to mention that my marriage survived as well. Are you laughing??

Just imagine you have more expenses and a lower income in a matter of seconds.

I will not lie; this will probably be the hardest thing you have done.

Lack of sleep, no time to eat or shower, and financial worries, but I am proud to add an enormous sense of accomplishment.

I like to think that the worst is now behind me.

There are so many things I wish I had known before I had kids, but here I am now, and I will share with you some of my precious findings.

Here are some tips on enjoying parenthood instead of worrying about your finances and sanity.

What Are EI Parental Benefits?

EI parental benefits are offered to parents who are caring for a newborn or newly adopted child.
A maximum of 35 weeks of parental benefits is available to biological, adoptive, or legally recognized parents.
The two parents can share these 35 weeks of benefits.
A person recognized as the child’s legal parent on the provincial or territorial birth certificate may be eligible to receive parental benefits.

Qualifying For Maternity Benefits

How do I know if I qualify for maternity benefits in Canada?

In 2023 you need to demonstrate that:

You’re pregnant or have recently given birth when requesting maternity benefits.
When requesting parental benefits, you care for your newborn or newly adopted child.
Your weekly earnings from work have decreased by more than 40% for at least 1 week.
You accumulated 600 insured hours of work in the 52 weeks before the start of your claim or since the start of your last claim, whichever is shorter.

Hours Needed For Maternity Leave

You must have accumulated at least 600 hours of insurable employment in your qualifying period to be eligible for EI maternity benefits.

If you are aself-employed fisher, you must have earned $3,760 from fishing during the 31-week qualifying period immediately before starting your benefit period.

Hours of insurable employmentare the hours you work for either one or more employers under written or verbal contracts of service for which you receive wages.

Thequalifying periodis shorter of:

the 52-week period immediately before the start date of your EI period,or
the period since the start of a previous EI benefit period, if that benefit period started during the last 52 weeks

Source: canada.ca/benefits/Employment Insurance Benefits

Maternity Benefits

Receiving maternity benefits can begin 12 weeks before your due date or birth date.

However, you can’t receive these benefits more than 17 weeks after your due date or the date you gave birth, whichever is later.

Claimants can work while collecting benefits is allowed but only after the waiting period.

You can keep 50 cents of your EI benefits for every dollar you earn, up to 90% of the weekly insurable earnings used to calculate your EI benefit amount.

This 90% amount is called the earnings threshold.

Once you reach the threshold, you will be deducted dollar for dollar.

Paying Taxes On Maternity Benefits

Your EI benefits are taxable, meaning that the federal and provincial or territorial taxes will be deducted from your benefits.

How Much Money Will I Get On Maternity Leave?

While on maternity and parental leave, the basic benefit rate is 55 percent of your average insured earnings, which currently, as of January 1, 2012, the maximum is $45,900 yearly.

This means you can receive up to a maximum of $485 weekly.

Some parents work for companies that top up their salaries, paying the difference between the maternity benefit and their normal salary.

As of January 1, 2017, the maximum yearly insurable earnings amount is $51,300. This means that you can receive a maximum amount of $543 per week.
Related: Maternity Leave In Canada Part 1 The Basics
Update 2017:
If you are employed in insurable employment, your employer will deduct the applicable EI premiums from your wages or salary.
There is no minimum or maximum age for paying EI premiums.
You need to pay EI premiums on all your earnings up to a maximum amount.
In 2017, for every $100 you earn, your employer will deduct $1.63, until your annual earnings reach the maximum yearly insurable amount of $51,300.
The maximum amount of premiums to be paid in 2017 is therefore $836.19.
Since Quebec has its own program that offers maternity, paternity, and parental benefits, the Government of Canada has adjusted the premiums accordingly for that province.
In 2017, the premium rate for workers in Quebec is set at $1.27 for every $100 of earnings, up to a maximum amount of $651.51 for the year.
Please Note: Policies and financial figures above can change often.
Source

Basic Rates Maternity Leave 2023

Update 2023: Use the maternity benefits calculator to estimate your potential benefit.

The basic rate used to calculate maternity and standard parental benefits is 55% of average insurable weekly earnings, up to a maximum amount.

In 2023, the maximum amount is $650 a week.

Maternity and Parental Benefits Overview 2023

Benefit name	Maximum weeks	Benefit rate	Weekly max
Maternity* (for the person giving birth)	up to 15 weeks	55%	up to $650

Benefit name	Maximum weeks	Benefit rate	Weekly max
Standard parental	up to 40weeks can be shared between parents, but one parent cannot receive more than 35weeks of standard benefits	55%	up to $650
Extended parental	up to 69 weeks can be shared between parents, but one parent cannot receive more than 61weeks of extended benefits	33%	up to $390

Family Supplement 2023

You may be eligible to receive the family supplement if:

Your annual net family income is $25,921 or less.
If you have at least 1 child under 18.
You or your spouse receive the Canada Child Benefit.

Money-Making Opportunities On Maternity Leave

Can I make money while on maternity leave?

Yes, you can also make money while on maternity leave by selling items, working part-time, starting a blog or website, babysitting, etc.

Related: Making Money On Parental Leave in Canada

Start Saving Money

Couponing is for everyone-Just, like everything else; when you want to save money, you can do many things.

You cannot imagine how much money you can save until you try it. It is just plain ridiculous.

So, a word of advice, get started now!

There is a huge community of money-saving Canadians who use coupons and who will welcome you anywhere you go.

Another option is to sign up for online cashback websites such as Rakuten for huge savings.

Coupon apps such as Checkout51 and FlashFood where you can buy highly discounted groceries from Loblaws stores, are a must.

Related: Where to find coupons in Canada

Cut Back On Extras and Start Budgeting

Another helpful way to save money is to cut back on the extras and know where your money is going.

Look at your expenses and determine what you can live without for now and the long term.

Perhaps you could cut down on stops to the coffee shop or cafeteria or remove your premium cable.

Related: Maternity Leave Part 2: Budgeting

It would be best to decide between what you “need” and “want” to stick to the budget.

Have you ever done the math to see how much you spend in the budget by eating out and buying coffee?

You will be amazed at how much you can save by eliminating or decreasing this expense.

Do you want to know what a sample budget looks like?

Plus, subscribe to this blog and get a 52-page free Canadian Budget Binder to print at home.

Be Energy and Water Smart

Now I am not saying not to flush your toilet anymore, but to stop watering your driveway and to turn off lights when you don’t need them.

My favourite way to save electricity is to use my appliances off-peak.

Most electricity providers offer lower rates during off-peak, especially with the new smart meters.

Off-peak electricity is provided during set times, typically between 19h00 and 07h00.

I save around 60 dollars every month that way.

Stop Hoarding

A lovely way to put some money aside to survive on your lower income is to make room for your baby.

Yes, it is time to sell everything you have kept for no reason.

The bigger the house, the more useless stuff we keep.

Make room for the mountain of baby clothes and toys coming your way.

Maternity leave doesn’t have to be scary as long as you plan and consider where you want to be financially.

Removing all the “wants” and filling them with “needs” and surviving maternity leave will become less of a burden on your finances and well-being.

Discussion Question: How can mothers survive maternity leave on a lower income?