Image: Tero Kyllönen / Yle

Two-income families stand to gain financially if fathers were to use the maximum amount of paternity leave, according to calculations by Nordea Bank.

The financial institution crunched the numbers and concluded that if the mother in a two-income family earns 2,900 euros monthly and the father brings in 3,500 a month, the family could end up with around 2,500 euros more in hand if the father uses the maximum amount of paternity leave available, compared to not taking any leave at all.

The calculation assumes that the mother goes out to work for the entire time that her partner is on paternity leave and that the father receives the child home care allowance while he is at home with the little one.

It also assumes that the earnings-related paternity allowance would cover work-based income lost by staying at home. In the bank’s model, the father would accumulate 4,900 euros for 54 days of paternity leave, based on his pay level. The bank assumed that the father would take leave when the infant reaches the age of 12 months.

Paternity leave becoming more popular

According to Olli Kärkkäinen, a Nordea economist specialising in household finances, the discussion about parental leave should focus more on whether or not a family can afford not to take paternity leave than whether or not they can afford to take it. However he acknowledged that it might be difficult for many families to make precise calculations about the impact of leave on household finances.

Kärkkäinen noted that the perception that taking paternity leave would dent family finances often arises from confusing different kinds of benefits when calculating the financial impact. In a recent blog posting, the national benefits agency Kela reviewed the reasons why there have been varying assessments of how many fathers use or do not use paternity leave.

The maximum amount of paternity leave currently available to fathers is 54 working days. According to Kela, dads can stay at home at the same time mums are at home for up to 18 days while mothers are receiving maternity or parental benefits.

There have been many calls to reform parental leave to allow fathers more time to stay at home with their infants. However finding consensus on the subject has been difficult.

According to Kela, more fathers have been taking advantage of using paternity leave in recent years. However one in four dads still don’t go off on paternity leave at all, and very few use the entire 54 days allowed.

Very few report a financial hit from having a baby

A Nordea survey of families with children found that having a baby does have an impact on household finances. Half of parents with young children said that newborns were responsible for at least a small dent in their families’ financial position.

"Having a child is a major change that can also have financial implications. The birth of a child increases expenses while and at the same time it reduces income. Fortunately, these changes can be anticipated, and this shows in our survey," Kärkkäinen commented.

The majority of respondents said that the financial impact corresponded with their expectations, while just one in six families said that their finances were adversely affected more than expected.

Renters face tougher times

The survey also asked respondents whether or not the birth of a child affected their ability to pay for living expenses. Roughly one in three families said that it became slightly more difficult to manage expenses after a baby was born.

Just seven percent reported much more difficult paying bills after the arrival of a newborn, while parents living in rental homes reported greater challenges covering expenses than their peers living in owner-occupied homes.

"Income differences alone do not explain the disparity between [the experiences of respondents in] owner-occupied and rental homes. I believe that the difference was also due to the fact that it is easier for home owners than renters to reorganise their living expenses," the banker noted.

One in four respondents with mortgages said that they had applied for instalment grace periods because they were expecting a baby.

The Nordea survey polled 502 respondents with children under the age of six.