Everything You Need to Know About Financial Planning for Baby
The arrival of a baby means new parents are seeking answers to lots of questions. While you might find yourself analysing the latest stroller technology or debating the benefits of organic baby food, understanding your financial footing can be one of the best ways to start your parenting journey off right!
Make a Pre-Maternity Leave Plan
Planning to apply for benefits from both the federal government and your employer is one of the most significant planning pieces and will require a little homework. It will pay off financially and additional time you can spend with your baby — which is priceless:
- If you are raising your child with a partner, consider if and how you wish to split parental leave benefits. After 15 weeks of maternity benefits, parental leave benefits typically kick in.
- If you employer has an Employee Assistance Program — take advantage of it. These programs are free to eligible employees and can help navigate applying for benefits.
- New parents can choose either a standard plan that provides EI (employment insurance) spread over 35 weeks, or the extended plan that reduces the amount paid each week and pays out over a longer period of time, up to 61 weeks. Although the benefit amount is reduced over the extended option, you may be able to save on daycare for an older child while you are home.
- If covered under your employer benefits, ask how you enrol your newborn to take advantage of subsidized costs for any medications or specialized appointments you may need in the first few months.
- Clarify with your employer if you are eligible to continue to earn credit for vacation time etc., while on maternity leave.
Lock-in Life Insurance
With a little one in the picture, ensuring you and your partner have a proper life insurance policy is so important! You’ll have piece of mind knowing your baby is taken care of should any worst-case scenario happen.
As the type of policy and amount of insurance will vary between providers it’s best to research while you have the time and focus (a.k.a before your baby arrives!).
Start a Registered Education Savings Plan (RESP)
It’s hard to imagine that a tiny, adorable human will one day be old enough to make their own meals, earn a driver’s license, and apply to university, but they will. Take advantage of the months and years ahead by signing up your child with a solid and reputable RESP plan to help with education costs.
Work on a Will
Much like life insurance, a will is an important building block in protecting your family. Regardless of your income level or savings, the ability to delegate any assets at the appropriate time can have a significant impact on your family’s future.
Experts recommend you revisit your will often, as any changes (the addition of another child, purchase or sale of property, inheritance from family) will impact your responsibilities and financial legacy.
Carefully Consider Capital Expenditures
You may not own your own home now, but if you are in the market, consider the long-term impact of where you purchase your property. Given the high cost of home ownership and moving expenses, preview your key priorities. If living near extended family means being far from schools and preferred daycare options, weigh these options before you part with that hard-earned down payment.
Research Tax Breaks and Benefits
An accountant or even your own in-depth research can offer significant benefits when it comes to discovering tax breaks and eligible expenses that can be realized once you welcome children. Consider looking into free or subsidized programs and resources in your local community (child care, sports programming) and provincial federal initiatives that can offset or cover partial costs or fees.
Good Financial Gifting
The addition of an exceptionally-cute-seven-pounder may result in generous financial gifts from friends, co-workers, and family. Birthdays and other milestones are often ongoing opportunities to receive such gifts throughout childhood. While it’s tempting to splurge on something new for your newborn infant, toddler or tween, consider starting the habit of depositing financial gifts into a savings account where they can earn interest instead.
Have any great tips for fellow families on how you prepared financially for your family pre-baby? Let us know below!
Written by: Alison Rockwell