Red Portfolio Home > Reaching Your Goals > Having a Baby
Now that you’re expecting,
find out what to expect.
It may be the only time in your life where you’re willing to live with a little sleep deprivation. Welcome to the world of parenthood! And whether you’re getting ready to have your first baby or have just added another child to your family, we can still shed some light on the many important decisions you’ll be facing in the years to come. Because the more you know about the financial considerations a baby can bring about, the more you can relax and get to know the newest member of your family.
Budget for all of you.
Creating a budget and learning to live within it isn’t a new concept. But budgeting when children are in the scene might throw you into unfamiliar territory – especially if you’re welcoming your first baby. You need to consider the basic extras you’ll need to add to the budget – like food, medical care, clothes, childcare, etc.—as well as future financial considerations, like a post secondary education. See attached link for great ways to save: http://www.statefarm.ca/ca/mutual/mutual.htm
Now is also the time to review your insurance needs and life. Be realistic when arriving at your budget numbers and understand that, at least for a while, extras like expensive vacations, dinners out and new furniture may need to take a back seat for your little bundle of joy. But we’re pretty sure you’ll think they’re worth it!
The average monthly cost for childcare for toddlers attending 40 hours a week is $497.
(Day care costs vary by each province and the figure shown here is the calculated median average of all the provinces combined.)¹
Will it be one income or two?
If signs are pointing to a need to maintain two incomes, research childcare costs in your area first. In some cases, they can be more than one of the salaries in question, meaning you won’t see much of a financial incentive to return to work. You may also want to investigate the possibility of establishing part-time employment or a work-from-home arrangement with your current employer. If you don’t ask, you’ll never know your options.
If you’re thinking about becoming a single-income family, it’s a good idea to give it a test run before the baby arrives. That way you can see how realistic of a goal it is and find ways to budget around the missing second income. Many families also forget that there can be some tax incentives to having just one income – you might even drop to a lower tax bracket.
Reviewing your insurance needs.
Chances are that even without a baby in the household, you’re already set with insurance. But don’t forget to make sure your current coverage is enough to cover the new addition. This is especially important if you’re moving to a one-income family—double check to make sure the one insurance plan includes family coverage and whether or not the premium will increase.
What you may be missing in your insurance portfolio is disability and life insurance. That’s because many people don’t think they need them until they become responsible for a child. (See Protecting Your Family for a complete round up of the different types of life insurance available.) Disability insurance, often overlooked, deserves more than a passing glance since the chances of a parent becoming disabled before their child turns 18 is actually higher than their risk of passing away.² If you have disability through your employer, it may only cover 50 to 60 percent of your current salary so, depending on your needs, you may choose to supplement your coverage. This is especially important if you’re a single parent.
What if something happens to me?
No one likes to talk about this. But it is one of those facts of life that are better addressed than avoided. The simple reason? Making sure you’re prepared in the event something should happen to you or a spouse protects your family’s future. So make plans to talk to a lawyer to establish a will/trust and guardianship for your children. (See Protecting Your Family's Future for more details.) Be careful not to let emotions get in the way of deciding who’ll take care of your children in your absence. Obviously, a personal guardian needs to have a genuine concern for your children’s welfare, but you should take into consideration whether the prospective guardian has the time, commitment and stability to fully devote to them. You may also want to look for someone who shares the same values, spiritual beliefs and parenting techniques as your family.
If you’re a single parent, the need for a will or trust becomes even more urgent to make sure what happens to your children is carried out to your complete wishes. You may also want to consider setting up a living will which will make sure any directives concerning your healthcare are carried out in the event you can’t speak up for yourself.
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