6 money tips for new moms and dads
Chad Fraser
Whether you’re expecting your first child or have another on the way, nobody has to tell you that raising kids isn’t cheap.
How much does it cost to raise a child in Canada?
There’s no official Canadian government estimate. But the US Department of Agriculture once pegged a total of $233,610 (in U.S. dollars) per kid in a 2-child, married-couple, middle-income household.
That’s staggering, but don’t feel discouraged. Canada’s Fraser Institute takes a different view, estimating $3,000 to $4,500 per year per child. That works out to $81,000 through age 17, at the high end.
Luckily, there are ways to keep your children from draining your bank account. Here are 6 everyday tips that can help:
1. Find out how much you’ll get from maternity and parental leave benefits
In baby’s first year, parents face a double hit: a jump in costs and an income cut when one or both parents take time off to spend with the new arrival.
Luckily, planning ahead and factoring in parental benefits can help ease the blow. Parental leave benefits from Employment Insurance (EI) come in two parts. It starts with a maternity benefit that pays 55% of the mother’s average weekly earnings for 15 weeks. That’s up to an upper earnings limit of $51,700 a year. This amounts to a maximum of $547 a week.
Then there’s the 35-week parental benefit. This benefit pays out at the same percentage and can be taken entirely by one parent or shared by two. Or, parents can opt for the 61-week extended parental benefit. Parents may also share the extended benefit, which pays 33% of average weekly earnings.
In addition, there’s the Canada Child Benefit, a tax-free monthly payout. With one child under 6, your maximum benefit would be $533 a month (or $6,400 a year). That number would fall to $450 a month (or $5,400 a year) for a kid between six and 17.
However, the benefit changes based on your household income and the number of children living with you. So if you have one eligible child, for example, you’ll get the full amount if your household income is below $30,000. What if your household income is above that figure? Then your benefit will be reduced by 7% of the amount of your income between $30,000 and $65,000, and by another 3.2% of any income over $65,000.
2. Clean up on diapers
The average newborn goes through thousands of diapers in the first year. Reducing your costs here could represent significant savings over time and cloth is the way to go.
Here’s a realistic scenario. A 128-pack of disposable name-brand diapers may sell for around $35. An average baby will go through around 22 packs of diapers in the first year. Together, that comes out to $770 plus tax.
Throw in the fact that the average baby girl spends 35 months in diapers and the average baby boy, 39. Then you’re looking at a potential outlay of $2,000 to $2,500 and maybe more.
Cloth? A 12-pack may go for around $250. True, you’ll use more electricity, water and detergent, but the savings are clear.
3. Accept hand-me-downs for your baby
You may feel tempted to outfit your new charge with the latest gear. But don’t head off to the mall just yet.
Cribs, change tables, strollers, baby monitors, etc. The amount of stuff kids need in the first year is dizzying could into the thousands of dollars if you buy new. And sure, that $80 sweater would look great on Junior. But with the average child growing about 2.5 inches per year through age 10, it’ll be a hand-me-down in no time.
That’s where friends and family come in. The more you can accept, borrow or swap, the more you’ll save. Other options? Classified sites like Kijiji, local buy-and-sell Facebook groups and consignment shops.
4. Look for baby items that do double duty
“I recommend looking for gear that’s multi-purpose or can grow with your child,” says Karen Mills, a mom from Parry Sound, Ont. “like a car seat that converts into a booster seat. Or a pack ’n’ play that has a bassinet insert for infants but serves as a portable crib later on.”
5. Borrow, don’t buy children’s books
Introduce your child to your local branch as soon as possible. This not only helps foster a love of learning, but can also save you cash.
“Rather than always buying my son new books, he has a library card, and we go on regular excursions to the library,” says Toronto mom Miriam Claerhout. “When I hear about a book I think he might like, rather than buy it, I will get it from the library, especially if it’s the first book in a series. If he likes it, I might consider buying more.”
libraries also offer free events, such as the Ottawa Public library’s Every Child Ready to Read program, featuring stories, songs and games for infants, toddlers and 3- to 6-year-olds. They also have family and evening story times for kids of all ages. Check your local branch to see what they offer.
Also look for community access programs such as the Toronto Public library Foundation’s Museum + Arts Pass and the Calgary’s Public library’s Arts + Culture Pass. Both sponsored by Sun life, these programs provide free passes for families to museums, art galleries and other cultural venues.
6. Consider opening an RESP for your child
Don’t forget to look into longer-term financial strategies like registered education savings plans (RESPs).
RESPs are a great way to save up for your child’s education. Parents can contribute money any time to an RESP – up to a lifetime total of $50,000 per child. You also won’t have to pay taxes on any investments growing in the plan until you withdraw the funds.
Along with tax-deferred growth, the federal government will also automatically contribute a Canada Education Savings Grant (CESG) of 20% of what you put in, up to $500 per year. That’s up to a lifetime maximum of $7,200 for each child. If your family income is low, you can receive an even higher amount. For details on these and other grants your chid may get, visit CESG.
