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The (financial) cost of raising a family.


When you’ve got to rush your kids to soccer practice, shop for dinner, help with homework and juggle the many different duties involved in being a good parent - all on top of your regular job - it can be hard to carve out a little time to think through your finances. But it’s definitely worth it. And the earlier you start to plan, the less overwhelmed you’ll feel.

Here are some financial tips to help you keep your family on the right track:

1. Anticipate the expenses of raising a family.

This step is to wrap your head around all the expenses involved in raising a family so you can plan for them in advance. Some things you’re going to have to budget for include:

  • Baby gear, like cribs, car seats and strollers
  • Ongoing expenses like diapers, baby food (and normal food)
  • Health costs, like medical/dental expenses or potentially braces
  • Daycare/babysitting/childcare
  • School tuition and later post-secondary education costs
  • Sports, hobbies and after-school activities
  • Transportation (maybe it’s time for a mini-van?)
  • Clothing (they’re always growing!)

This isn’t an exhaustive list by any means, but it gives you an idea of what you’ll have to manage along the way. And it is manageable – it just requires a little planning, which brings us to tip number two.

2. Put together a plan to juggle your expenses.

Budgeting might not be the most exciting part of parenthood, but it sure can help things run a little smoother. Once you have an idea of your family’s mandatory monthly expenses, you’ll have a clearer picture of how much disposable income you have for the extras.

We’ve put together a Budgeting Money Map to help you stay organized. There are also plenty of apps available that can help with budgeting, like Mint and Wally. It should also give you an idea of areas you might be able to cut back on, like subscription services you are not using much anymore. The goal is to keep yourselves from overspending and having to borrow.

If you’re soon-to-be parents, you’ll also need to think about how to approach the earning side of parenting. Will one or both parents take parental leave when baby arrives? How about after that – will one parent stay home while the other keeps their job? Or do you look at childcare and both continue working? And, does the government offer any assistance?

3. Pack your parachute.

By this, we mean – be ready for the unexpected and have financial safety measures in place. The best way to do this is by creating an emergency fund. This is money you’ll set aside for those surprises that you never budgeted for, like a job loss or medical emergency.

You may have created an emergency fund years ago – usually it involves stashing away enough to cover 3-6 months expenses in a High-Interest Savings Account – but it’s time to revisit how much you’ve saved. Is it enough to cover, not just your expenses, but your whole family’s?

It’s also a good practice to save up your money leading up to the birth of your baby, so you aren’t any financial strain when its born and you go on maternity or paternity leave. That’s a good example of what we’ll talk about more in our next tip.

4. Plan ahead so you don’t fall behind.

We touched on some of the monthly expenses that go hand-in-hand with raising a family. But you’ll encounter some larger expenses that you just won’t be able to squeeze into your monthly budget. Instead, you’ll have to make a plan.

A great example is your children’s post-secondary education. If you know that this is something that they’ll likely want to pursue and you want to help them financially, it’s makes it a lot easier to manage if you start saving early.

Your best option is a Registered Education Savings Plan (RESP), which is a government assisted, tax-sheltered investment account, designed to help you save for your children’s post-secondary education. The money from this account can go towards any school related expenses.

It has two amazing features: (1) your investments grow tax-free until withdrawal, usually at the student’s tax rate so minimal taxes are charged. And (2), the government chips in 20% of the first $2,500 contributed each year (up to $500 per year and $50,000 total per child) through the Canada Education Savings Grant (CESG).

That’s just one example of a ‘big-ticket’ expense. When they grow older, you might also want to help them pay for their wedding or buy their first home. Taking that first step and making a plan is the hardest part, after that you can kind of put your saving on autopilot.

5. Get creative with your saving.

In order to make things work, you’ll sometimes have to get creative with the way you save money. Obviously, you don’t want to splurge on unneeded luxuries. You also want your dollar to stretch as far as it can go. With that in mind, here are some quick money saving tips.

First, for ongoing expenses like diapers, food and so on, try and stock up and buy in bulk. Not only will you be saving on gas and shopping time, but generally you can get better prices when you buy in larger quantities.

Second, don’t be afraid to look for deals in the grocery aisles, or use digital apps (like Flipp) to help get discounts on things on your shopping list. Also, try to take advantage of rewards and loyalty programs when possible. By shopping smarter, you’ll have more money for other things.

And lastly, make the most of hand-me-downs. Young children don’t usually care if they’re wearing the latest fashions. They might even enjoy wearing the cloths their older sibling used to wear as a sign they’re growing up. You might even have friends who can pass on outgrown cloths.

There’s a lot to juggle when you’re a parent and your finances are just one piece of the puzzle. But we’re here to help you, every step of the way. If you have a question or need some helpful advice, just give us a call at the True North Hub at 1-866-413-7071.