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(Chris Bernard/Chris Bernard/iStockphoto)
(Chris Bernard/Chris Bernard/iStockphoto)

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Baby steps to financial preparation Add to ...

Doug and Megan Liddell are expecting their first baby this month. The excited Calgary couple, both in their 30s, feel fairly prepared for the new addition to their family. They've spent time creating a spending plan based on Ms. Liddell's maternity leave pay and stashed away a lump sum for baby costs. Still, they're not sure they've covered all their financial bases.

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Financial issues rarely get enough attention in general, but this can be especially true in the case of preparing for a newborn. As a result, many new parents avoid dealing with and planning for the life changes ahead. Below are a few of the most common mistakes new parents make, and how you can avoid them if you're expecting.

Not creating a spending plan

The time before baby's first birthday is usually the priciest, costing the average parent thousands of dollars in additional costs. If you're planning for a new addition to your family, visit a baby cost calculator to run the numbers on what items you'll need and how much they'll cost. To help create your spending plan and future financial plan, you might also want to consult with your financial planner. If you don't have a planner, try to get a referral from a friend or relative. If that doesn't work, then visit the Financial Planning Standards Council to search for a planner in your area. Most experts recommend reviewing your plan every three months, or at the time of a life change - having a newborn certainly qualifies as a major life change.

Putting off post-secondary saving

It might be hard to consider saving for something so far down the road, but the ideal time to start thinking about saving for your child's education is when your child is born. Plus, by opening up an RESP, you can earn up to $7,200 in grant money absolutely free. It's estimated the cost of a post-secondary education 15 years from now could reach $40,000, so every bit of help will make a difference.



The Invest for Life series:

  • Part 1: Ten money tips for young people
  • Part 2: Ten money tips for people entering the work force
  • Part 3: Getting married? Ten money tips
  • Part 4: Having kids? Pull out the wallet and get set to invest for the future
  • Part 5: Married, with kids? Ten investing tips
  • Part 6: Financial tips as you climb the financial ladder
  • Part 7: Preparing for retirement: 10 tips
  • Part 8: The retirement years: 10 financial tips


You'll need a social insurance number (SIN) for yourself and your child to open a plan. There are different kinds of RESP plans to pick from, and your provider or adviser can walk you through your options to find the right fit for your family.

Overspending on baby costs

It's likely that many of your friends are in the same life stage as you are and have or are having babies soon. One of the best ways to save on baby items is to swap clothes and other essentials with friends. This is especially fitting for age-specific gear that baby will only use short term. Babycenter.ca is a great money-saving resource for new parents. If you are in the market for something new, Viewpoints.com and eBay.ca are two sites that offer reviews and price comparisons for a variety of makes and models. You can also search the site Craigslist for items at a fraction of the original price.

Missing out on tax benefits

Missing out on tax benefits is like walking away from free money. For example, The Universal Child Care Benefit (UCCB) is a government program that gives Canadian families $100 (pre-tax) each month for each child under the age of six. Your baby does not need to be in a daycare for you to receive this benefit, even though it was originally designed to help cover costs of child care. However, you do need to fill out an application in order to receive the payment.

Parents should also look into the Canada Child Tax Benefit (CCTB), which is aimed at low- and middle-income families. The amount is based on the age and number of children, family income, and child care expenses. Benefits are paid monthly and are non-taxable. There is a basic benefit for each child under 18. Check out this site for more information. Keep in mind you may also be able to deduct child care expenses from your income when you're filling out your tax return, so make sure to keep receipts for your child care expenses.

Postponing a will

To protect your family, and to ensure the distribution of the wealth you've worked hard to create isn't left up to the government, you need a will. There are several options in preparing for the "what if" and "when" life scenarios. First, you can hire a lawyer to draft your documents for you. If you don't have one, you can find a wills and estate lawyer in your area at lawyerlocate.ca or get a referral. With a little homework and prep on your part, you can minimize the cost of working with a lawyer. Will preparation checklists will help. Or, you could draft your own will with help from such websites as legalwills.ca. Cost will vary depending on what you are creating. However, be aware that any ambiguities or inaccuracies could cost you and your beneficiaries in the future. It's smart to have a professional review what you've created if that's the route you're going.

There's a lot to think about before baby arrives, but financial preparation should be added to the top of the list. It might seem difficult to plan for something hypothetical, or an event that's not likely to happen for years - such as attending college or university, when you're preoccupied with just getting through each day. Avoiding some common financial mistakes will not only ease your mind today, it will also set you and your family up for long-term financial security tomorrow.







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