The arrival of a child brings major life changes. Being financially prepared can help smooth the transition into parenthood. Here are a few steps you can take to get ready for the arrival of your newest family member.
1. Update your budget
If you intend to take parental leave, as well as maternity or paternity leave from work, you can anticipate a lower monthly income during the time that they are on leave.
You will need to think about upfront costs for equipment like a crib and car seat. Childcare expenses may be a major budget item in later months. It’s never too early to start saving for your child’s education after high school.
2. Apply for benefits and credits
Employees who have worked in the year prior to adopting a child or having a baby may be eligible for Employment Insurance (EI). Apply for benefits as soon as you stop working to ensure your income is not delayed.
Once your new child arrives, you can apply for the Canada Child Benefit, a tax-free monthly payment for families with children under 18 years of age.
Parents who adopt could also be eligible for an adoption expense tax credit to offset costs incurred during the adoption process.
3. Save for your child’s education
The earlier you start saving, the less you have to save on a regular basis.
The Registered Education Savings Plan (RESP) helps parents save for their child’s post-secondary education. As an added incentive, the government matches funds up to a prescribed maximum amount.
The Government of Canada has useful information about how RESPs work, including contribution limits and deadlines.
4. Prepare for the unexpected
If you don’t already have life insurance, now might be a good time to invest in it and protect your family’s financial future.
Your child’s arrival is a good time to set up or update your will. An important part of this process is assigning legal guardianship of your child to someone you trust.
The Canadian government has a guide with useful information on financial and non-financial considerations when you have a baby.