Whether planned or not, this joyful milestone in life comes with a full spectrum of emotions. But those feelings should go hand in hand with a rational assessment of the new financial needs and opportunities that come with parenthood. Welcoming a new family member brings many changes—including financial ones. On one hand, expenses increase; on the other, income may decrease, especially if a parent decides to stay at home for an extended period. Good planning is key to managing financial challenges and raising your child with peace of mind. Here are some tips to guide you through this new stage of life.

 

Planning Initial Expenses and Adjusting Your Budget

One of the first steps is to make a checklist of necessary baby items—clothing, cribs, strollers, and initial health needs. This will help you estimate how much money you'll need to set aside for one-time purchases. You can save money by using second-hand items—either ones you’ve saved, received from friends, or bought used. Review your monthly expenses and evaluate what changes are needed to account for ongoing childcare costs. Revise your budget to reflect these new costs, considering the possible drop in income due to maternity or paternity leave. Set aside enough funds in your emergency fund to be prepared for unforeseen expenses or financial hardship.

 

Income and Maternity Leave

Bulgaria offers one of the longest periods of paid parental leave. The issue of cash benefits during maternity/paternity leave is governed by the Social Insurance Code (SIC). These benefits are intended to replace your work income while you're on parental leave. Typically, benefits are granted to insured parents—another reason to regularly pay social security contributions based on your actual income. Your insurance income matters because the maternity/paternity payments during the first year are calculated based on it.

If you’re employed under a labour contract, you are mandatorily insured through the State Social Security system in various funds, including “General illness and maternity” fund. Self-employed individuals must choose to be insured for this fund. To be entitled to maternity benefits, you need to have accumulated at least 12 months of insurance service (continuous or interrupted) as insured in this fund.

Several types of benefits related to the birth and raising of a child are provided for in the SIC. Since the law contains provisions related to compensation in various life situations—such as adoption, deceased parent, deprivation of parental rights, and others—it's important to know which provision applies to your case.

 

Cash benefits for birth and childcare:

• Cash benefit for pregnancy and childbirth: You’re entitled to this benefit for a total of 410 days -  from 45 days before birth until the child turns one year old. The cash benefit is calculated on a daily basis and is equal to 90% of your average gross daily remuneration or your average daily social insurance income for the last 24 months. Specific limits apply, related to the minimum wage and insurance thresholds. Fathers are entitled to 15 days of leave at the birth of a child and, with the mother’s consent, can take over childcare from the 6th month onward for the remaining days. Alternatively, rights can be transferred to a grandparent, provided they are employed under a labour contract.
• Cash benefit for non-use of maternity leave: If you return to work before your child turns one year old, in addition to your salary you are entitled to a benefit of 50% of the amount you would have received during the period of maternity leave.
• Cash benefit for raising a child up to two years of age: After the end of the pregnancy and maternity leave, if you take your paid leave to raise a child, you are entitled to receive benefits until your child turns two years old. This applies to either parent, depending on who is taking the leave, and also applies to adoptive parents. The amount is determined annually by the Law on the State Social Security Budget.
• Indemnity for non-use of additional paid parental leave up to two years of age: If you start working (under a contract or as  self-employed) or the child begins attending a childcare centre, your parental leave will end, but you're entitled to 50% of the childcare benefit amount for the whole or the rest of the period.

The Social Security Act also provides for other types of cash benefits – for the adoption of a child up to the age of 5 and for the raising of a child up to the age of 8 by the father (adoptive parent). Cash benefits are paid by the National Social Security Institute (NSSI).

 

Length of service and Maternity

The first three years of childcare are recognized as work experience for retirement, but during the third year, no monetary benefit is paid. Depending on life circumstances, the parent may return to work or use their paid annual leave accumulated over the two years of maternity. In the third year after the birth of the child, parents are entitled to six months of unpaid leave, which can be taken all at once or in parts until the child reaches the age of 8.

There are also benefits for working parents of young children that you should check. For example, mothers with children under the age of 3 who work under a labor contract receive extra protection against dismissal—this requires permission from the Executive Agency General Labor Inspectorate.

 

Family Benefits for Childbirth and Childcare

Parents may receive financial support through social assistance under certain circumstances. The family benefits for children are regulated by the Family Allowances Act and are administered by the Social Assistance Agency.

All parents receive a one-time childbirth allowance. The allowance is paid without an income requirement for each live-born child not placed in foster care outside the family. The amount of the allowance is determined annually in the State Budget Act and varies depending on whether the child is the mother’s first, second, or third, with higher amounts for the second and third one.

Other types of family assistance target specific life situations and are aimed at the most vulnerable parents—those without social insurance rights and/or with low income, adoptive parents, parents of twins, children with disabilities, children with a deceased parent, and others. More information on family benefits for children is available on the website of the Social Assistance Agency.

 

Future Planning: Protection and Funding for Life Goals

As parents, you undoubtedly want to ensure your children’s financial well-being and security, and to provide for their future. Think about the fact that you are the source of your family’s stability—it depends on your income and care. One of the best strategies for financial security is taking out a life insurance policy (see more on the topic in article „Life insurances“). That way, your loved ones will have financial support even in the worst-case scenarios.

Every parent wants not just protection, but to support their child’s future—education, development, and success. A good way to realize these goals is to start saving and investing early (see more on the topic in section „Investing“).  Planning these financial aspects in a timely manner not only makes budget management easier over the years but also gives you peace of mind that you’ve done your best to support your children.

 

Raising Financially Literate Kids

No matter what lifestyle or career path your children choose, they’ll need to manage money wisely and effectively in a fast-changing and unpredictable world. That’s the only way they’ll be able to achieve their goals and avoid financial difficulties. It’s proven that parents play a leading role in shaping their children’s financial knowledge, skills, and behaviors. You can find out which topics are important to discuss with your kids in section “Growing up”.

 

Useful links:

Social Assistance Agency

National Social Security Institute

Executive Agency "General Labor Inspectorate"

Social Security Code

Law on Family Allowances for Children