Make the most of government benefits
The government offers financial assistance to new parents in Canada, so make sure to look into what you could be eligible to receive.
Employment Insurance (EI) maternity and parental benefitsOpens a new website in a new window are available to people who are about to or who have recently become parents. These can help you with the immediate cost of raising children and managing living expenses while off work with a newborn. You may also be able to receive other payments like the Canada Child Benefit (CCB) and Child Disability Benefit (CDB) on a yearly basis.
Create a budget
When babies first come home, the financial resources you require to take care of their needs may be basic. But as they grow, previously unconsidered expenses – such as increased health insurance premiums – can surprise parents.
That’s why it’s important to start budgeting for a baby now. Setting up a category just for your child and recording all childcare expenses under it makes it easy to see how much you’re spending.
Set up a Registered Education Savings Plan (RESP)
According to Statistics CanadaOpens a new website in a new window, students enrolled in full-time undergraduate programs will pay an average of $6,693 a year in tuition for the 2021/2022 academic year.
Add this to things like the cost of accommodation, travel and supplies and post-secondary education can be a huge expense. An RESP can help you save towards that goal. Not only does the money grow tax-free within the plan, but the government chips in with significant grants depending on your contributions.
To set up an RESP in your child’s name (and to allow them to work in Canada in the future), they’ll need a social insurance number (SIN). Most provinces offer a Newborn Registration ServiceOpens a new website in a new window that allows you to apply for a SIN along with your child’s birth registration. In British Columbia and Ontario, you can apply for their birth certificate at the same time.
Protect against the unexpected
It’s not easy to think about. But you need to help ensure your family will be taken care of financially if you or your partner die unexpectedly.
Once you’ve calculated how much you’ll need to pay off your mortgage, help put your child through university or college, and replace your lost income, you can estimate how much life insurance you’ll need.
Also, consider these basic estate planning steps for new parents:
- Create an inventory of assets and debts and store it in a safe place that only a trusted person can access.
- Review your insurance policies and update beneficiaries if any changes are needed.
- Prepare a will and identify the person you would like to be the child’s guardian.
Plan (and save) for the future
Children can be costly: food, childcare and education are just some of the expenses you’ll need to add to your budget.
New parents often prioritize those costs over their own financial goals such as saving for a home, car or even retirement - but it’s important to remember to save for the long-term even if it’s only via small contributions.
Even saving a little each month can add up over time, and the sooner you start to save, the more you can benefit from compound interest (making interest on your already-earned interest) to help increase your savings. Investment accounts like a Registered Retirement Savings Plan (RRSP) can also help you grow your money over time.