Feeling too broke for kids? You’re probably not, but you might need to change how you spend

It turns out that love isn’t all you need.

It can go a long way, that’s for sure, but raising a family is an enormous investment of your emotions and money.

If you’re feeling unprepared financially, the good news is you can whip your finances into shape rather quickly if starting a family is what you want to do.

Put these concepts into practice pronto.

Make a plan for parental leave

Your income will go down once your baby arrives. Despite parental leave benefits through the government and possibly your employer too, in almost all cases, your monthly income on leave will be less than if you were working a full-time job.

The best thing you can do to prepare for this dip in cash flow is save up starting now. With every paycheque, squirrel away as much as you can into a savings account. You can use that to tide you over— but when you do use, try to space out using it so that it covers the duration of your parental leave, typically 12 to 18 months.

Not sure how much to tuck away? It can help to understand what your benefits will be (hop on the relevant government website and check with your HR department). Then calculate the difference between that parental-leave income versus your full-time income. Try to save that difference starting right now … which leads to my next point.

The good thing about being on parental leave is you are usually laying low taking care of your family, and that can result in reduced spending … as long as you’re not online shopping all day.

Start making changes to your budget and lifestyle now

It can be a challenge to save aggressively, given rising inflation (have you seen your grocery bill lately?), high housing costs and the prolonged impact of the pandemic on the economy. Plus, if you’re a millennial, you may still be paying off your mega-expensive wedding. So you’re probably going to need to cut back your expenses, and don’t delay.

Go through every category of your budget with ruthlessness. Reduce subscriptions, start meal planning, and negotiate your insurance, cellphone and internet bills. If you’ve been a shopper (clothes, video games), dial it way back. If you’re paying too much in rent, you might need to move to a more affordable location.

It can be very helpful to analyze your habits as you start to form new and more healthy spending priorities — having a family kind of forces this upon you. I like to recommend to my students that they go so far as to create a mock parental-leave budget and a return-to-work budget. That way you can see the numbers and find extra motivation to trim. You can even work RESP contributions into your calculations.

And, whatever you do, don’t take on more debt.

Keep your startup costs low

There are really only a few absolute essentials you need when your baby arrives: a safe place for baby to sleep (typically a bassinet or crib in your room), a car seat, a stroller, basic clothing, diapers and wipes, burping cloths and blankets, a place for you to sit and feed (your couch is free, BTW) and appropriate feeding supplies (bottles, a breastfeeding pump, formula, etc.).

As the baby grows, you can add the appropriate gear in your home. I highly recommend trying the second-hand market or borrowing from friends before buying anything new.

If you’re very mindful, you can probably keep your total startup costs under $1,000, and you can space out the purchases so they don’t happen all at once. Also, set up a gift registry that focuses on essentials rather than toys.

Think about your child-care strategy sooner than later

There’s lots of political talk about making child care more affordable … but most parents don’t have that financial relief just yet (unless you live in Quebec). You absolutely must start factoring these costs into your future plans immediately. It is not uncommon for this expense to range between $1,250 to $3,000 per month … per child! So get your game plan together, which might mean upgrading your job or relying on some free family support.

PS: This phase of your child’s life is financially hard for parents, but relief comes when they get a bit older and start going to school. There is a light at the end of this tunnel.

Know you can do this

Money should not hold you back from starting a family. However, be smart about your financial choices today so that you aren’t financially overwhelmed while you’re parenting.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.