Starting a family: A financial checklist for new parents

Congratulations! If you’ve made the decision to welcome a new addition to your family, get ready for an incredible and transformative experience. No doubt you’ve started planning for the practical and emotional changes you’ll face.

But whether you’re adding to your family through birth, adoption or surrogacy, the financial side of parenthood also requires careful consideration – and expert advice.

Here’s a checklist to help you navigate some of the financial aspects of this significant life change before baby arrives:

▢ Assess your current financial situation.

No way around it – there’s a real cost to starting a family. In fact, the average Canadian family spends between $10,000 and $15,000 annually until a child is 18. Get prepared for this additional expense by reviewing your spending habits and identifying areas where you can cut back or reallocate funds.

Have outstanding debt? Look or ways you can lower, consolidate or pay it off – especially high interest debt like credit card balances.

▢ Build your emergency fund.

Unemployment is stressful, especially when you have a growing family. Make sure you build an emergency fund that covers at least 6 months of expenses to cover gaps in employment, unexpected medical bills or any unforeseen financial challenges.

▢ Plan for the cost of alternative paths to pregnancy.

If you’re embarking on a less traditional route to parenthood, there are additional costs to consider. For example, the cost of IVF can be significant and varies depending on the province you live in. Generally speaking, you can expect to pay between $13,000 to $17,000 per cycle when you factor all the costs in, but some provinces may cover the cost of some fertility procedures like IVF, IUI or fertility preservation, so it’s worth investigating what may apply to you.

On top of that, more and more companies are expanding their health care benefit packages to include coverage for fertility treatments – be sure to check what your coverage includes.

▢ Factor in childcare costs.

The cost of childcare can vary widely, depending where in Canada you live, but on average parents paid $7,790 per year for the main full-time child care arrangement for their 0-5 year old child in 2022.

Be sure to research childcare options (and get on waitlists as soon as possible) and estimate associated costs.

▢ Start saving for your child’s education early.

Planning for a new addition to your family also means thinking about their future. A Registered Education Savings Plan (RESP) is a flexible option that grows tax deferred and holds a variety of investments or just cash – and allows anyone (like grandparents, extended family or friends) to contribute as well.

Not only that, but you can receive grants and incentives like the Canada Education Savings Grant which adds 20% of your annual RESP contributions up to an annual maximum contribution of $2,500 or $500 in CESG grant funds.

▢ Purchase or update insurance policies.

It may not be something you want to think about, but one of the most important things you can do as a new parent to protect your growing family is to consider purchasing life insurance (or update your existing life insurance policy).

A child is typically a dependent for at least 18 years, so the loss of a parent and their income could have a significant impact on the surviving parent’s ability to provide for the family – or ability to cover future expenses like post-secondary education. And don’t forget about disability or critical illness coverage – odds are much higher you’ll need this type of insurance if you’re out of work for some time or encounter a devastating illness.

Purchasing a life insurance policy on your child is another effective way to provide for your child’s future for two key reasons.

You can buy insurance at any time, but if you get coverage when they are very young, the cost will be lower than if you wait until they’re older. And, by locking in coverage now, you’re protecting them against any adverse change in their health that could impact their ability to purchase coverage later.
Not only that, but many policies include a cash value component that will build over time and be available for your child to access in later years.

▢ Make or update a will.

Creating a will is important for everyone, but especially for new parents. Although it’s just one component of a comprehensive estate plan, a will allows you to appoint a guardian for your child or children, add your children as beneficiaries and make decisions about how and when to leave an inheritance. It’s a good way to begin thinking about your child’s future.

Get expert financial advice

Becoming a parent is a big step. But when it comes to financial planning for your new addition, you’re not alone. We can help alleviate your money stress so you can focus on every joyful moment of becoming a parent.

^[1] Canadian kids cost parents more than $350,000 from birth to 17, Statistics Canada study suggests - The Globe and Mail

^[2] Estimates of parental child care expenses in January to February 2022 (Statistics Canada)