Having your first baby? These money moves can help set your growing family up for success
Diaper changes. Feeding cycles. Weird Google searches about what the tiny bump on your baby girl’s pinky finger could be. Unannounced visitors. Following up with your employer for your Record of Employment to qualify for EI maternity and parental leave benefits. Trying to sleep when the baby sleeps (that advice is a joke, BTW … newborns have a knack for only sleeping when you’re awake …. and being awake when you’re desperate for sleep — it’s like they’re on Singapore time).
The fatigue and forgetfulness is overwhelming for new parents. But one of the best ways to put the “bliss” back into being a new parent is removing these four money tasks before delivery day, so you can enjoy those newborn cuddles.
Automate every possibly aspect of your banking before baby arrives
If a bill or payment can be automatically paid from your bank account or credit card, set it up. Most vendors have a payment portal online that will allow you to register for autopay yourself. Others, you might need to call in for.
Many credit card companies will allow you to set up an automatic “pay in full” pre-authorized debit so that the entire balance is cleared on the day it’s due, thus preventing any interest charges.
Start saving now for the cost of future child-care expenses and taking a hit to your household income
Now is the time to sock away money — like never before. In the first year, the baby expenses might tally up to $200-300 per month for wipes, diapers, nursing pads, formula and barrier cream, etc. Then you’ll probably want to think about making an RESP contribution in order to take advantage of the Canada Education Savings Grant.
But the bigger cost is the hit to your household income. Whether you’re in a partnership or solo parenting, you need to bank on earning much less (like half or even less) for the full parental leave (typically 12 to 18 months), and beyond because once you’re back to work, you’ll be paying for child care which can range from $900 to $3,600 per month depending on the style of care you use … and lucky you if you have a parent or grandparent who wants to nanny for free!
Here’s what I suggest you do to start the saving process:
Step 1: Make a budget (current state of affairs). What can you afford to start saving into a high-interest savings account (rates have gone up on these accounts, BTW)? Now, push yourself. What can you trim in order to save more … like 50 per cent more or even double. Or, what can you do to raise some extra cash (more shifts, selling your designer shoes, doing your benefits claims). Start socking every spare dollar away.
Step 2: Automate your savings contributions so that they happen weekly.
Pro tip — do not knix life and critical illness insurance from your budget. I know it’s tempting to do so in order to save costs, but you’re about to be a parent and having proper coverage is more important now than ever before. And if you don’t have coverage, get on it!
Get the scoop on your benefits so you can make a parental leave budget
If you are traditionally employed you may have benefits to top you up financially (or your partner). Well before the baby arrives, get the details on how much you can expect, for how long and if there are any nuances like a payback clause if you don’t return to work within a set time frame. Most top-up plans complement the EI benefits that you may be eligible for. You can take these numbers and work them into a future parental leave budget. I am a fan of budgeting apps like Mint or YNAB.
It’s also important to mark a day in your calendar to update your health benefits to include baby after birth.
And, if you’re an entrepreneur, you may be eligible for EI maternity and parental leave benefits for self-employed people (recently updated). Speaking from firsthand experience, you’ll want to hire someone (or assign someone) to cover your duties for a while when the baby arrives. The last thing you want to be dealing with from the hospital is chasing a late invoice or running payroll.
Space out baby gear purchases
The basics to focus on are having plenty of diapers and onesies for the first month, a bassinet, a car seat, a thermometer, a place to feed your baby (hint, the couch is free), bottles and formula (in case breastfeeding isn’t an option) and a stroller. If your friends and family are throwing you a baby shower, be strategic with your registry and focus it on the essentials first, and the nice-to-haves second. Baby will eventually require additional items such as larger clothes and a crib, but you’ll have at least a month or two after the baby is born to make these purchases. Space these purchases out and try to buy them on sale. You may even want to try to get everything second-hand.
Taking care of these important financial priorities now will allow you to focus on being present, healthy and ready for this exciting new chapter.
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.
