Whether you are planning or expecting to have a baby, finances are usually at the top of everybody’s mind. And let’s face it, raising a child isn’t cheap! Like anything else new, there is always a lot of uncertainty and a ton of questions. One of the most important things to realize is you’re not alone.
Let’s take a look at the four major tips you need to know when budgeting for a baby.
1. Create a budget
Its so easy to get carried away and spend money on things you may need. Its important to keep an eye on the budget, there is no harm in buying things as you go.
As you start to plan what life will be like with your little one, there are so many different things to factor in like, how many diapers you’ll need, what type of toys will they like, which formula is best and how many clothes are needed? While this might seem overwhelming, it’s a great place to start when creating a budget. It’s important to factor in these costs early so you not only know what to expect, but you know how much it’ll likely cost. Here’s how to start:
- Write a list of what matters – this is a perfect time to prioritize your needs, wants and/or must haves. It can be really tempting to splurge on things like tiny designer sneakers, but as your little one is growing quickly (and outgrowing everything), try to focus on what they really need for their clothes and toys. You can buy more as you go along and know what you and your baby really need.
- Look at your income – make sure you are being realistic and covering costs that come first (i.e. food, housing costs, transportation, etc).
- Adjust monthly – it’s no surprise that things happen, checking in periodically can help you reorganize if needed.
2. Start saving and planning early
Book a meeting with your financial advisor to go over different savings options for you and/or your spouse to prepare for the big day. There are a ton of options to make sure you are setting up for success.
- Set a goal – determine an amount you are looking to save over a period. If you are expecting, starting earlier is always better.
- Create a joint savings account – this is great way to keep track of all the allocated funds. You can even setup automatic money transfers with Pre-Authorized Contributions (PACs), so you don’t have to worry about remembering to do it yourself each month. Out of sight, out of mind! Wondering how you can earn more while you save? Take a closer look at some saving account rates.
- Get a credit card with good rewards – if are you a responsible spender, look for a card that gets you cash back or redeemable points.
- Follow the 30-day rule – if you are looking to make an impulse purchase but are on the fence, deposit that amount into your savings account instead. If you still want to buy it once the period is up, go for it. If not, that money stays there.
3. Prepare for their future
As parents, you ultimately want what’s best for your child. Although things happen quickly, it’s important to think ahead for what will help them succeed in the future.
Nihar Vakharia says, “If I were seeing someone expecting or having a newborn, I without fail remind them of all the RESP benefits. As parents, they only have their child’s best interest at heart and it is important that firstly and primarily, they save for their baby’s education. The last thing you want is the child to grow up and not be able to achieve their educational goals because of financial reasons.”
An RESP is a Registered Education Savings Plan that lets you to set aside money for your child’s or grandchild’s education and allows it to grow tax-deferred until they need it to pay for school. The government will match 20% of what you put into an RESP, up to a yearly limit of $500, and a lifetime maximum of $7,200 per child. You will need their birth certificate and SIN number to get this process started. Contact your closest Scotiabank today for more details!
Looking for other ways to save for you child’s education? Take a further look into our wide range of investment solutions.
4. Enroll in the Canadian Child Benefit program
This step is a no brainer! The Canadian Child Benefit program is a monthly tax-free payment from the Canadian Revenue Agency to help support the cost of raising a child. This program is available to eligible families with children under the age of 18. Depending on your household income, the amount can vary but it is worth looking into. This fund can help with costs of daycare, food, education, etc.