Getting your Family Finances in Order Before Your Baby Arrives
You’re having a baby! Congratulations! This is an incredible time in your life. However, as you may have already realized, it’s a busy time as well. And it’s also likely a stressful one. There’s a lot that you have to do and getting your finances in order is a big part of preparing for your little one’s arrival.
Here are some tips for getting your financial situation ready for the new addition to your family.
Plan for Maternity Leave
In Canada, if you have accumulated at least 600 hours of insurable employment in a qualifying period and meet the criteria for receiving employment insurance, you can receive maternity or parental benefits. Maternity benefits are only for biological mothers who are unable to work due to giving birth and can be paid for a maximum of 15 weeks.
Parental benefits are for legally recognized parents to use while they are caring for their newly born or adopted child. Both parents can apply for parental benefits, but they have to share the benefits. In total there are 35 weeks of parental benefits available.
This means that, for a child born to a biological mother, there is a total of 50 weeks available.
It’s important to remember that maternity leave does not replace your entire salary for the time you’re off. For most, benefits cover about 55% of average weekly earnings, so you’ll need to make a plan to live off of less money than you’re used to.
Find out if your employer provides any sort of maternity benefits. Some employers offer to pay some of your salary while you are away from work caring for your child.
Also remember that you need to apply for maternity and parental benefits, so make sure you do so before your child is born.
Make a Budget for Baby Items
It’s very easy to get wrapped up in shopping for baby stuff. It’s all adorable and, of course, you want the best for your child. That said, it’s important that you don’t go overboard. Do research and find out what items you really need. Ask other parents for advice. Chances are, you’ll find out that some baby items were hardly touched and you’ll know not to buy similar things.
Consider used items. Babies grow and develop so fast that they outgrow or stop using items long before they’re worn out. If you have friends or family who have had a baby in the last year, see if they have anything that they can sell to you or let you borrow. You can also look online for used clothing, strollers, toys, etc.
Plan for Childcare
You might not be using childcare services right away, but it’s still important to have a plan. First of all, many daycares have long waiting lists, so if you want to use a daycare that’s near your home or your work, it could take years for you to get a space. Inquire about available spaces as soon as you find out your pregnant. This could help you avoid travelling long distances to the only daycare available, and it could also help you get into a daycare that is more affordable.
Childcare is also quite expensive. Depending on where you live, you could end up spending quite a lot of money on daycare. The median monthly fee for care is about $700 a month, and this gets more expensive for infants and young toddlers. Know that, in some areas of the country, the costs can be a lot more expensive. For example, in Toronto, it’s not unusual to pay up to $2000 a month for childcare.
Calculate how much you’ll need to spend, how much you can afford, and start saving now.
Make a Savings Plan
In addition to saving for daycare and other baby expenses, you’ll also want to create a savings plan for the future. If you plan now, you’ll be less likely to be caught off-guard by a sudden expense later on.
It’s never too early to start saving for your child’s education. Postsecondary schooling increases in cost every year, so the sooner you start putting money aside, the better. Remember, the federal government annually matches 20% of the first $2500 you put into an RESP for your child. That means you could get $500 for free each year if you plan and save properly.