Expecting your first baby, planning adoption or fostering, or exploring fertility treatment options? Regardless of what your path looks like, you’re probably watching way too many YouTube videos about stroller reviews. It’s exciting, but let’s be honest, it’s also when the little voice in your head asks “Wait…can we afford this?”
It’s true, your money situation is about to change in a big way. We’re talking more than diapers, tiny clothes and daycare – we’re talking time off work, new savings goals and protecting your growing crew. It doesn’t have to be scary, it’s just about turning those worries into a solid money plan so you can spend less time stressing about the budget and more time enjoying those incredible firsts!
The first big financial change isn’t the diaper bill, it’s your paycheck. Taking time off work is a gift, but it comes with a financial shift.
In New Brunswick, most parents lean on Employment Insurance (EI) maternity and parental benefits. It’s important to know that EI typically covers only about 55% of your regular income up to a certain maximum. Visit the Government of Canada’s website to learn about and apply for the Employment Insurance maternity and parental benefits. Some employers also offer a top-up of benefits to bridge the gap between your normal pay and your EI benefits, so be sure to speak with your HR department and fill out any paperwork they’ll need prior to taking your leave.
The government will deduct only the basic tax on any EI payments they deposit into your account. This amount does not account for any earnings you have already made in the year or what tax bracket you’re in based on your total earnings for the year and may result in a surprise tax bill the following spring. Consider asking Service Canada to take additional tax from your EI pay or setting aside a savings to help with the tax bill come next tax season.
Your newest family member comes with new expenses so it’s time to give your budget a refresh. Add regular costs for things like diapers, formula and tiny clothes, but remember – buying gently used gear or hand me downs from friends and family can save a huge bundle of money.
In addition to these everyday items, childcare is usually the biggest expense. Start early researching costs of daycares or babysitters and get your name on waiting lists immediately.
There are also additional medical expenses down the road like eye exams, dentist visits and prescription medications. If you have a private insurance plan at work, make sure to update it to add your child so these costs are covered down the road.
For many couples, the journey to parenthood is more complex and involves fertility treatments. If this is part of your journey, the financial planning changes dramatically and the costs can feel overwhelming. Here are some starting points for financial discussions if you’re on this path:
Ask your doctor about costs upfront, not only for the procedures, but for consultations, tests and medications.
Check with your insurance provider if any of these costs are covered by your plan.
Check for government programs in place to help families manage the financial burden, and keep all receipts for treatments, medications and any necessary travel as you may be able to claim medical costs on your income tax return.
When you grow your family, a will and life insurance can be essential to protecting your family’s financial future. Life insurance is the safety net that can help your partner and children cover expenses even if your income is suddenly gone. Finally, it is never too early to start planning for their future education. Savings plans like an RESP (Registered Education Savings Plan) offer government matching of your contributions – that’s free money earmarked for their future university or college costs!
Children fundamentally change your priorities. Your financial decisions should reflect you and your partners shared values. As you’re updating your budget and adjusting your financial plan for this exciting new stage, it’s important to work together to check in on your progress and dream about your shared goals. And please avoid the social media comparison trap – focus on what works for your family, not what your FYP tells you to buy.