What to expect when you’re expecting
The arrival of a new family member is an exciting time but for most first-time parents, the idea of welcoming a baby can be somewhat scary and intimidating – especially when calculating the costs.
For the average family, the cost of raising a child in the first year can be as much as $16,0001 or more and the cost of raising a child until the age of 18 can be over $240,0001. With potential costs of that magnitude, it is obvious that preparation is needed beforehand to ensure you are on the right financial track to support a new family member.
“Couples who have received the wonderful news that a child is on the way should make time to sit down and discuss the costs and make necessary changes to their budget and spending habits,” says Sara Kinnear, Director, Tax and Estate Planning at Investors Group. “Ensuring you are prepared financially won’t take away all the anxiety that comes with parenthood, but it will relieve stress and help you focus on parenting.”
- Set up a Registered Education Savings Plan (RESP): An RESP is an effective way to offset the future cost of education. Be sure to check to see how much of the total education bill your RESP will actually cover.
- Revisit your household budget: A budget can change drastically when you add a new family member to the mix, so consider what new costs might be added to your monthly spending and what will be a one-time fixed fee.
- Get insured: Set up the necessary life insurance to cover your growing family.
- Be familiar with your benefits: Find out how your workplace compensation and benefits may be affected, including your health benefits, dental, pension plans and ect.
- Estate planning: It may seem premature, but speaking to your advisor to draw up a will ensures your family is covered, should anything happen.
Date reviewed: January 27, 2015
1 Your pride and (really expensive) joy, MoneySense.ca, June 2011
This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.