Parenthood. Arguably the most difficult and rewarding job you’ll ever take on. Welcoming a child into the world is the most life altering transition you’ll ever face – and there is a lot to plan for a consider!
On the Practical side, you have many options to look over – is your current home big enough? Is it close to schools or child care? You may need to think about moving to another home.
There is also the childcare planning once the baby arrives. Who will take leave? Will both parents take some time off, or just one? Will you use vacation days? Does your work offer any additional benefits to maternity or paternity leave? What about after? Will your child go to private dayhome? Or will you send them to Daycare?
In between all of this, you are navigating a sea of emotions that change rapidly – from joy to anxiety to exhaustion and fear – you have a lot handle before the little one even arrives!
The age-old adage when it comes to planning for children is: You should be financially secure before even thinking about having kids. Unfortunately, that is not the reality for most parents, and whether your child comes by surprise, or your financial circumstances change during pregnancy or after, no one can be fully financially ready. You can, however, plan your finances around this life transition.
In today’s inflated economy, the cost of raising ONE child has averaged to around $281,000 from 0 to 18. This breaks down to $15,560/year or $1,305/month. If you’re already struggling to budget and make ends meet every month, a little one may need to wait a bit longer until you feel more secure.
These numbers are only an average and government support exists in Canada for those with lower incomes: Canada Child Benefit
Once you’ve made the decision to bring a new life into the world, there are many preparations that need to be made. While you’re out buying all the fun baby items and planning for that adorable nursery, you should also be considering the long-term financial goals for your child.
If you have a partner, it’s best to sit down and have a thorough discussion on how you plan to raise your child, and if you’ll be equipped to assist them financially in the future. Whether it’s something small like a weekly allowance, or something much larger like planning for education, you’ll need to be on the same page about expectations with savings. There are ways you can set up savings accounts to benefit your child for their future, from standard savings accounts, informal or testamentary trusts, to RESPs, there is a savings vehicle designed to fit your financial needs.
Not only do you need to plan for their future, but you’ll need to plan (or alter your current plan) for yourself. Your wills will need to be updated, and you’ll need to decide how you want to handle your estate and any legacy you plan to leave behind. Maybe you’ll help your kids more in life, so you won’t be leaving an inheritance. There could be issues between children or other family members, prompting you to exclude someone from your will. Perhaps you plan to leave a legacy to only your grandchildren? Maybe you’ve mixed families and have stepchildren that need caring for?
There are many different types of families and many different family situations to plan around. If you find yourself wondering how to plan your legacy, please read the below links, and be sure to talk to your financial professional.
Remember that money isn’t everything when it comes to children. They need love and connection from their parents and peers. As a parent your job will never be done, and you’ll always have their best interests at heart. With the right spending and budgeting plan, and the right financial advice, you can rest assured that you have your family’s needs taken care of for the present and the future.
The Biddle Johnston Wealth Management Team