The average cost of raising a child in Canada from infancy to age 18 is a whopping $253,947, . So how can expectant parents prepare for their $250,000-plus bundle of joy?
Take a deep breath
The first step is to take any baby sticker shock with a grain of salt. Rules of thumb about how much a child will cost tend to be of limited use because costs vary so much depending on your province of residence, whether you live in an urban or rural area, and myriad other factors, says Noel D鈥橲ouza, a certified financial planner at Money Coaches Canada.
When thinking about the long term, all you have to worry about is getting your paperwork in order and setting a few overall saving goals, says D鈥橲ouza.
Make sure you have a financial plan in place for the worst case scenario: If you haven鈥檛 already, draft a will and a power of attorney, which designates a person you appoint to take over your financial and legal affairs, should you become sick or disabled.
If you already have these documents in place, update them to reflect the new arrival in your family. You should also review your coverage in terms of life and disability insurance, and and increase it as needed to ensure there would be enough for the other parent to raise your child and fund her education.
The other priority is deciding how much you want, or can reasonably afford, to help your offspring financially: Will you be paying in full for your kids鈥� education? Are you going to help with a down payment on a house?
Once that鈥檚 settled, don鈥檛 worry about attempting elaborate financial projections for the next 18 years. Estimating your day-to-day expenses only makes sense for the first few years after birth, when you鈥檒l likely face both a reduction in income, as one or both parents leave work to take care of the little nugget, and you dole out money for steep childcare costs.
Do the math
If possible, do the math well in advance of the baby鈥檚 due date. Speak to your employer to understand what benefits and top-ups are available, if any, for parental leave. That will help you evaluate which parent should stay at home, says D鈥橲ouza. Once you鈥檝e determined that, start saving to make up for at least some of the expected income reduction.
On the expenditure side of the equation, turn to family and friends 鈥� especially those living nearby 鈥� to calculate your own, customized three-to-four-year estimate. What are the childcare options in your neighbourhood and how much do they cost? Saving in advance for childcare is also a good idea, says D鈥橲ouza, just think of it as a 鈥渂aby chest.鈥�
Avoid the baby spending spree
Shopping for baby is an expectant parent鈥檚 chance to daydream: Won鈥檛 your little peanut look cute in those tiny leather moccasins? And isn鈥檛 that designer bib so adorable? But unless your finances allow you to be footloose and fancy free, resist the impulse to splurge. Your kid will never remember that New Zealand pine crib, so you might as well settle for the assemble-it-yourself kind.
Ask your friends with kids for advice on what should be on your list of baby essentials and what you can do without. Inquire amongst family members about whether you might be able to inherit some of the big-ticket items, such as strollers, car seats and cribs, or whether they will be among the baby shower gifts.
Even if hand-me-downs are hard to come by in your inner circle, there are plenty of online resources that can save new parents a pretty penny. Discount sites like often have coupons for toy and baby stores.
may also turn out to be a good friend in this regard: Especially if you live in a big city, check for buy-and-sell mom groups in your neighborhoods, where you鈥檒l be able to find anything from pacifiers to footed PJs 鈥� often in impeccable condition 鈥� for the price of an elaborate coffee drink.
Don鈥檛 raise little people to be big spenders
The good news is that kids generally become a little cheaper as they get older. Sure, it will get harder to keep the fridge stocked up when Junior is a teenager, but the moment he is out of daycare, you鈥檒l likely be over the financial hump. In fact, it might be time to convert your childcare savings account into a children鈥檚 activities fund, says D鈥橲ouza.
To realize those post-daycare savings, though, make sure to raise your children to become financially literate, adds D鈥橲ouza. Make them understand that mom and dad won鈥檛 cave in on buying those designer jeans 鈥� no matter the amount of foot stomping 鈥� because they are saving for something else. Explaining your money-management rationale helps 鈥渂uild a sense of self-worth and pride in the child,鈥� says D鈥橲ouza, 鈥渘ot a sense of entitlement.鈥�
