Financial Foundations: Children

Welcoming children into your life brings immense joy and responsibility, but it also comes with significant financial implications. The current average cost of raising a child to 18 in Canada is around $320,000; breaking down to roughly $1,482 per month. The initial year incurs substantial expenses—cribs, car seats, and other essentials that can strain finances. Daycare costs can be between $700 to $1100 per month per child. There is also potential income loss during maternity leave couple may experience.


 

Be aware of government benefits.

Canada's government offers EI maternity benefits for employed individuals who've contributed EI premiums. Maternity benefits are accessible to biological mothers unable to work due to pregnancy or recent childbirth. Additionally, EI parental benefits support biological, adoptive, or legally recognized parents caring for a newborn. These benefits require 600 hours of insurable employment during a qualifying period, with the option to claim 8 weeks before the due date. The maximum EI payout for new parents spans 61 weeks at about 55% of previous earnings, capped at $401 per week. The standard payout of 35 weeks is up to $668 per week.

Check out your employer benefits.

Job security during parental leave is crucial. Mothers have a right to 15 weeks of maternity leave, extendable to 35 weeks of parental leave. Employer benefit packages might include additional leave, healthcare, top-ups to EI benefits, or flexible work arrangements, but understanding their terms is vital, including potential obligations post-leave.

Child Tax benefits.

Tax benefits aid in alleviating child-raising expenses. The Canada child tax credit offers tax-free monthly payments per child under 18, with variations based on family income. The Alberta government provides additional benefits depending on the child's age, along with the Universal Childcare Benefit for children under 6. The Family Tax Cut benefits two-parent families by allowing income splitting, potentially reducing taxes for families where one partner earns substantially more. Various tax deductions, such as daycare expenses up to $7000 per year for younger children, provide further financial relief.

However, parenting isn't solely about finances and taxes. It's a rewarding journey that involves conscious planning, time dedication, establishing healthy routines, nurturing with love and discipline, and fostering the character development of your children. Money and taxes are just facets of this incredible experience.

 

All material has been prepared by McKenzie Wealth. McKenzie Wealth is an investment advisor team or Investment Advisor at Richardson Wealth Limited. The opinions expressed in this blog/ video are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth or its affiliates. Richardson Wealth Limited, Member Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons, Limited used under license.