Financial Planning For Couples: Starting A Family

Next to buying a house, raising children is a large ongoing expense for couples. Often both are experienced at the same time. If you’re renting a one-bedroom apartment, the upcoming birth of your child brings out the desire for a 3-bedroom house with a big yard.

I understand that not everyone wants kids, of course, but if you do, I don’t need to tell you about the benefits of starting a family. But children, while being one of life’s greatest blessings (at least most of the time), also cost money and consume a lot of your time.

Many people decide to have kids without a game plan in place (and there are those unexpected “accidents”), but there are lots of things you need to discuss when you decide to have children.

Starting a Family: Financial planning for couples

Are you financially ready to be parents?

Take, for example, a couple who are building their careers and making good money. They plan their budget accordingly, using both incomes to pay their bills and to support their lifestyle.

Would they be ready to experience the double whammy of a drop in household income (at least temporarily) and increasing expenses?

It’s hard to deal with a crying baby, sleepless nights and non-stop feedings and diaper changing without also worrying about money. That’s why it’s so important to make sure you’ve got enough savings to help get you through – at the very least – your baby’s first year. With some smart planning you won’t need to brace yourself for financial struggles ahead.

Before the arrival of your bundle of joy try living on one income and putting the second income into extra debt payments and savings. Not only will you have a bit of a cushion, you’ll be getting used to living on one salary.

Bringing up baby

So, how much do you need to pay for the basics in your baby’s nursery?

The first year is often the toughest one financially. has a first-year baby cost calculator. It’s an American site, but you can plug in estimated prices by checking retailers like Babies “R” Us, The Bay and Walmart.

Several sites offer checklists of what you’ll need, including Expectant Mother’s Guide. also has lots of info and comments and tips from other mothers.

Buy on sale and don’t get sidetracked by expensive stuff.  Focus on just what you need and, keep in mind that you can also look for slightly used items that a seller’s baby has outgrown.

Scour second-hand shops and ask for hand-me-downs. Check Kijiji and Facebook Swap & Buy groups. Babies grow so quickly, clothes and baby equipment have often just been used a few times before they’re outgrown, and can look brand new.

Lost wages vs daycare costs

Sitting in the hospital together while cooing over your newborn is not the time to tackle the issue of staying at home or returning to work after maternity leave is up. It deserves careful consideration well in advance of your baby’s arrival.

Many mothers choose to continue staying at home, and there’s been a rising trend of stay-at-home dads. Lost wages from being out of the workforce means you have to re-evaluate and adjust your spending and lifestyle. But, if you factor in all the expenses you’d be eliminating that would offset some income loss, it may make more financial sense than you think.

If you’re both going to work, discuss your childcare strategy ahead of time. Who’s going to care for your baby – a nanny, day care, relatives? Unless you live near kindhearted family members who are willing to raise your baby free of charge, the alternatives will cost money.

It’s best to do some research ahead of time to find out what child care costs are and whether you’re likely to get your child into a subsidized daycare in your area. Check to see how daycare compares to hiring a nanny.

Make sure you discuss and evaluate all your options.

Get the most out of benefits

Most Canadian parents are allowed up to 52 weeks off work to care for their new infants. To get the maximum benefits, be sure to apply for Employment Insurance as soon as you take your leave as it can only be claimed within the year following your baby’s birth. There’s a two-week waiting period.

Benefits are calculated at 55% of your gross income up to a maximum amount of $537 per week based on $50,800 worth of insurable earnings (2016).

Check your employer benefits too. Some offer partial income for parental leave. You may be able to continue with your health and dental programs if you pay the premiums.

There are some tax deductions, tax credits, and other benefits offered by federal and provincial governments. You may not qualify for all of these, but you’ll certainly be eligible for some. Make sure to apply as early as you can.

Effective July 1, 2016, the Canada Child Benefit offers monthly tax free benefits that are tied to income. The maximum is $6,400 per child under six and $5,400 per child aged six through 17. There’s a reduction when family net income is over $30,000, and again at $65,000 but the number of children you have also factors into what you’ll receive.

You may be able to deduct child care costs from your income on your personal tax return – up to an annual limit. Make sure you keep all your receipts.

Get a head start on university savings

It’s never too early to start saving for university. Tuition costs have been rising at almost 5% per year over the last decade. You can make the bill more manageable by setting up an RESP.

Make your money grow faster with the Canada Education Savings Grant that matches up to 20% of your annual contributions depending on your income. You may also qualify for a Canada Learning Bond – you can apply with your RESP provider or get more info at

Final thoughts

In the end, the choice of having children isn’t really a financially rational one at all. It’s purely emotional.

According to MoneySense magazine, the cost of raising a child to age 18 is $243,660. But the joy of watching your children grow from babyhood to adulthood is priceless.

Further reading on Financial Planning for Couples:

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