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You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.

ROMA: When you think about having a baby, paying for childcare is not the first or second thing that comes to mind. But it comes up real fast.

ROB: Today, we’re taking a personal finance deep dive into a huge cost of having kids: Daycare


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ROMA: Welcome to Stress Test, a Globe and Mail podcast on personal finance in a pandemic for Gen Z and Millennials. I’m Roma Luciw, personal finance editor at The Globe and Mail.

ROB: And I’m Rob Carrick, personal finance columnist at The Globe.

ROMA: Ok, Rob, let’s dive in by looking at some stats. How much exactly are daycare fees?

ROB: Ok, I’ve got a chart here in front of me.  It’s produced by the Centre for Policy Alternatives. They take an annual look at daycare costs and I’m looking at median infant fees from last year. A low of $181 a month in Quebec City, a high of $1866 in Toronto, which is to say, humongous.

ROMA: Oh my God.

ROB: No wonder they call daycare costs “the second mortgage.”

ROMA: It’s really hard to describe how painful it is to see that amount of money leaving your bank account every month. I remember it well. First of all, how difficult it was to even get a spot. I remember putting my name on those lists when the kids were young. When i was actually pregnant, I’m sure I did that. When my second son came, they were born close together, we ended up crunching some numbers and we decided a nanny was the best solution for us. But I really remember what a rigmarole It was like, running around putting it together, you know, sweating all this. And I remember mostly how stressful it was. What about you, Rob?

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ROB: Oh, sure. You know, we had a bunch of different arrangements, and we had some home care. And then at a certain point, there was an after-school program at the boys’ public school that they used. But I remember scrambling around to find good care, to get to the daycare on time in the morning and pick them up, you know, before they closed at night. It’s a huge, dominant part of your life when you have young children. But you know, one encouraging thing I’d like to say about daycare is that it’s a puzzle that everyone will have to solve but it is solvable. Everybody did it on the fly. I think costs are so high now that you need to do a little bit more preparation, your house is more expensive than it used to be. Your daycare is rising quickly in cost as well. So what I hope we can do in this episode is help you map out how you’re going to afford daycare. So you don’t do it on the fly, you’re ready for what comes.

ROMA: Yeah, the biggest factor there has to be housing costs. We’ve seen prices for housing go through the roof. And so one thing that you can really do that will make a difference is before you buy something, make sure that you can afford to make that mortgage payment and also pay for the cost of daycare for one or two children or however many it is you plan to have. What are some options for if you already are in a home and you’re looking to do this?

ROB: If you’re looking ahead to having kids and you already own a home, I think what you need to do is find out how much you’re going to be paying for the kind of daycare that you want, and figure out how you’re going to cram that into your budget. What will I give up? What will I adjust? There’s going to have to be adjustments. And the message I’d like to get across to people is, if you have to save less, that’s understood. It is a fact that parents of young children are not able to be prime savers. You’re forgiven. You’re off the hook. Don’t worry about it.

ROMA: One of the things that strikes me is since the pandemic has started, fees have been rising among daycares. I saw a recent report that said they went up 15% to 21% between 2019 and 2020, in places like Brampton and Mississauga. We already know that Toronto has some of the highest costs out there -- we are seeing a direct correlation between a drop in enrollment in daycares. And that has been consistent since the pandemic began, it reflects the difficulty. Parents have lost work. They are at home now they’re struggling to pay for this. This all ties into the she-cession, which has been well-documented. You know, the fact that people are leaving the workforce or they’ve been forced out of it, and they are staying home and looking after kids. What are the repercussions for that?

ROB: We need people in the economy working. Canada has a productivity problem. And one way to address it is to get more people into the economy working and producing and daycare helps with that. It’s an economic imperative to have affordable daycare. It’s a human right almost. The federal government seems to have recognized that with a promise in the recent budget to provide, to work towards the goal of having $10 a day daycare. We’ll see if they can pull that off. It’s up in the air. But it’s been recognized how important this is, the fact that we need to lighten the load.

ROMA: I mean, daycare at $10 a day would be an absolute game changer for so many families. I mean that takes you at childcare for under $250 a month. So it would create a system that would directly benefit kids. It would directly benefit moms, parents, families, and you know, Canada’s economic well being.

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Daycare fees aren’t your reality until suddenly they are. We wanted to find someone who’s experiencing that life stage right now. And we did. That’s up next.

PRE-ROLL: This podcast is brought to you by CPP Investments. Take comfort knowing the Canada Pension Plan Fund will be there for you. We invest to help ensure the CPP fund remains resilient over the long term, sustainable and secure for millions of Canadians. Learn more at CPP Investments Dotcom.


ROB: Now I’m going to take you to the west coast to meet someone who is parenting for the very first time.

KRISTI: My name is Kristi. I live in Victoria, British Columbia, and I’m 34 years old. Both my husband and I are from Saskatchewan. We moved out here in March of 2020. And we moved here because we had both actually lost our jobs in Saskatoon and just kind of decided it might be a good time to switch things up.

ROB: They dreamed of moving to Victoria together and arrived just as the pandemic hit.

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Two weeks before, everything imploded.

And then about three weeks after we had moved here we found out I was pregnant.n I had my son in November of 2020. So he’s about six and a half months old, his name is Elliot.

[sounds of baby]

Right now, he is learning to crawl. So as soon as you put him down, he’s all over the place. [LAUGH] So you really have to watch him. So yeah, pretty much your whole life has to change. You don’t really think about all the little stuff until you have to think about it.

ROB: Back when Kristi and her partner learned they were expecting, they had both just started new jobs in Victoria.

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I was making about $55,000 a year.

ROB: They had to make every dollar count because they had just moved from Saskatchewan to Victoria, where their rent and utilities expenses shot way up.

KRISTI: Rent is $1765 including parking. So basically, $1765 versus $1100.

ROB: They were paying almost $700 a month less in Saskatoon.

KRISTI: And utilities were maybe half in Saskatchewan.

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ROB: And then, newly-pregnant, Kristi was laid off due to the pandemic.

KRISTI: I lost my job due to COVID. So I was pregnant and unemployed in the summer of last year, so that was very stressful. And then I had to go on EI.

ROB: EI doesn’t get you very far.

KRISTI: So I was bringing in about $2,000 a month. And then with my husband’s income, we were kind of just scraping by, with our rent and debt -- you know, debt including credit cards, car payments, student loans, everything kinda like that.

ROB: What was Kristi’s total debt?

KRISTI: I had about $60,000.

ROB: That’s 60, 000 dollars debt in total, most of it from credit cards, but also including --

KRISTI: $17,000 left on my student line of credit.

ROB: Financially, things were a strain as they were juggling their debt, pregnancy, a new job and city and Kristi’s sudden unemployment. Thankfully, she did find a new job while seven months pregnant. Now that the baby is 6 months old, she has gone back to work while her partner goes on parental leave.

KRISTI: And having a baby in a pandemic has been quite the experience. You know, they say it takes a village. Not having that village has been really difficult for me. I have really struggled with postpartum depression, and a little bit of anxiety. I finally kind of broke down and reached out for some help. I’ve seen a counselor whenever I can get in with her. And, you know, there’s certainly no shame in that.

ROB: It’s so true. And Kristi has had a lot on her plate.

KRISTI: And I think especially with this pandemic right now, and not being able to have the typical support that moms and dads would have. It’s so important to advocate for yourself, because healthy parents are good parents.

ROB: She started preparing for daycare before Elliott was even born. Because as parents know…

KRISTI: It’s super competitive. It’s really tough to get a spot,

I emailed between 50 and 60 daycares, asking November of 2021. And I heard back from 10 to 15, saying that I could be on their waitlist.

So, yeah, at this point, I’m just kind of hoping for the best, hoping for a miracle, whatever you kind of want to say.

ROB: When it comes to daycare costs, there’s a range.

KRISTI: Um, I think the lowest one that I saw was about $900 a month. And I think that doesn’t include lunches or snacks. $1,300, I think was the highest one that I saw.

ROB: That’s a great big bill to take on when you’re already, as Kristi said, just scraping by. But Kristi has been hard at work. Since finding out she was pregnant, despite being laid off and getting back on her feet, Kristi has paid off nine thousand dollars in credit card debt. That is a big win.

KRISTI: We have recently been lucky enough to have my parents step in and help us pay off some credit card debt.  So we’re planning on putting that, I don’t want to call it extra money, because it’s not. But I’m kind of putting that away for daycare.

I actually called all of my creditors and figured out the payoff balances and sat down and did all my banking yesterday. So the amount of weight that I kind of felt going away was pretty incredible.

But it’s still going to be tight.

We don’t have a lot of extra money.

ROB: The credit card debt has been taken care of but the daycare bill is on the horizon. How does it feel at this moment in time?

KRISTI: I still feel a little bit uneasy, just because I don’t know what the fee is going to look like. Because we don’t have a spot. So not knowing how much it’s going to be, that unknown is really frustrating for me.

ROB: When it comes to the long-term future, Kristi and her partner aren’t sure if they’ll have another child. Money is a part of the decision-making.

KRISTI: Yeah, the cost of it certainly does come into it. I think if we did get pregnant again. The thought of moving back to Saskatchewan would be more prevalent in our minds, both for having more help from family with both of our families being there and the lower cost of everything.

ROB: While daycare costs vary from region to region, the pandemic really drove home a singular message for all Canadian families and it’s what Kristi wants people to remember. When it comes to daycare:

KRISTI: It’s an essential service people. Everybody needs to work.


ROB: Roma, what do you think of the job Kristi is done getting control of her finances? I’m really impressed. I think she was in a hole. She’s digging yourself out of it. And she’s starting to look ahead and anticipate expenses like daycare that is a pro at personal finance right there. What do you think?

ROMA: I think anytime you can get rid of a substantial amount of debt, it feels like a weight has been lifted off your shoulder. So I think that she is in a much better position. The one thing that strikes me about Kristi’s story is that she is in a very similar situation to many new parents. And I think my two cents here would be to give yourself a break. Take a deep breath, do your best, try to avoid, you know, taking on any unnecessary expenses.

ROB: One thing I’ll tell the parents out there is it is a great moment when you get your kids out of daycare or when you ramp down from full daycare to maybe an after school care. It’s almost like winning a lottery.

ROMA: Certainly feels like that.

To break down all the personal finance aspects of getting ready for the cost of daycare, we’re enlisting the help of an expert who happens to have a pandemic baby, too. That’s up next.

[MUSIC] MIDROLL: This podcast is brought to you by CPP Investments at CPP Investments. We never lose sight of the long term. We invest the Canada Pension Plan Fund to help provide financial security for generations of Canadians. We diversify the CPP fund across geographies and asset classes to access the best investment opportunities and generate sustainable long term returns. The fund is now more than 400 billion dollars. To learn more about our investment performance for Canadians, visit CPP Investments. Com.

JANINE: Hi, my name is Janine Rogan. I am a CPA here in Calgary, Alberta. And I am also the founder of the Wealth Building Academy, which is a financial literacy company aimed to educate women on investing.

ROMA: Janine Rogan is a chartered professional accountant and she also has a six-month-old baby at home. So she’s the perfect person for us to speak with today from a professional and lived perspective. Here’s our conversation.

ROMA: Okay, let’s talk about daycare. Can you start us off with a sense of how much daycare costs? I mean, I know it’s uneven among various cities in Canada, and locations and towns and really depends on where you are, but give us sort of a sense of what you’re looking at when you’re looking ahead to daycare costs.

JANINE: Yeah, when we started looking for daycare,  specifically we’ve been quoted everything from $1300 a month for a 12-month-old to $1900 to $2,000 a month and you know, that varies across a couple of different things, obviously, the number of days that you’re looking for care, how old the child is, and of course, where you’re located. So, you know, areas like Quebec have $7 a day daycare, which is fantastic for the entire province. And then you know, kind of as we go across the country, we’re going to see Toronto is going to be very, very expensive. Same with Vancouver, upwards of $1900 to $2400. And then, you know, places like, Manitoba and Saskatchewan have a little bit lower costs. And when I was looking at the averages for Manitoba, it was around $650 a month for someone who is looking to have their 12 month old put into daycare full-time.

ROMA: And there’s a difference between the earlier ages and slightly older kids. Can you tell us about that?

JANINE: Yeah, for sure. So in our situation in Calgary, it’s about the place we’re looking at is about $1600, for a 12 month old, but then as they get a little bit older, it kind of drops to about $1300 in those in those toddler years, and then when you kind of get into preschool, it’s around $900 to $1,000. And then ultimately, you know, once your kid goes to school, you still need after-school care for them. Because I guess unfortunately, our work days aren’t 8 to 3. So there’s a couple of hours where you are looking for care. And those are, you know, a couple hundred a month here in Calgary, $400 or $500.

ROMA: Okay, so what’s an average family with, you know, a small child paying for daycare a year?

JANINE: It’s a large number, it ends up being when I calculated it. For us, we’re looking at $19, 000 to $20,000 a year. And that ends up being $80,000 before our son is going to go to school in daycare costs, which is incredibly expensive and kind of wild to think about the fact that it’s almost six figures for childcare.

ROMA: Right. That is a huge amount of money.


ROMA: Janine, can you provide some financial context for people who are thinking about having a family, about how the cost of daycare lines up relative to other expenses that a household faces?

JANINE: So in more expensive cities, I would say it’s right up there with mortgage payments. For context, our mortgage payment is about $2,000 a month. And so when we’re looking at daycare, if anywhere from $1600 to $1800, that’s pretty close to the cost of a mortgage. I know housing prices are a whole other conversation. But I think it’s either the number one, depending on how many kids you have, or the number two expense for households, which is dramatic when you’re, you know, either trying to pay down your mortgage or save for retirement or save for your kids RESP, or even just get by on a monthly basis. It’s a huge cost to add for new parents.

ROMA: So it seems like there’s a huge divide here between people that choose to have kids and people who don’t, financially-speaking.

JANINE: Yeah, I think people who don’t have kids end up with a lot of, I don’t want to say spare cash in their budget, but they do have more flexibility, because they don’t have that added cost on a monthly basis. And I think in many situations, families are kind of scrambling to try and make everything work. Where can we cut? Can I earn more? I mean, it would be great if we had more affordable and accessible daycare like provinces, like Quebec.

ROMA: Yeah, it’s a huge struggle. And I think getting hit repeatedly with that daycare or childcare bill each month, and over the years is something that you don’t really have a handle on until you are paying that continuously. And it really felt to me when we were in those really hardcore years of paying that, that it was pushing a lot of things over to the side. And we were sort of treading water.

JANINE:Yeah, it can definitely feel like that. I, you know, I look at even our budget, and I’m like, how are we going to continue to make contributions to our let’s say, our retirement fund, or our son’s RESP. How do you do that and then pay $20,000 a year in childcare?

ROMA: Okay, so what is sort of the trade-off? What are people pausing out of necessity?

JANINE:I think retirement savings is a big one, it might not feel like it’s so imminent. So I do see a lot of people kind of pushing that off to the future. Vacations would also be another one, when you have young kids. Obviously we’re still in a pandemic, so nobody’s really flying anywhere. But hopefully, when we get back to normal, we’ll be able to. And I think people are maybe choosing to stay closer to home, or they’re giving up traveling altogether, because daycare is just so expensive.

ROMA: Okay, so say you pause, let’s say for instance, saving for retirement, or you just pay sort of the bare minimum for your mortgage payments, for instance, during the daycare years. Then what is the plan after those years finish?

JANINE: I think everybody should take a vacation, because they’re probably really, I guess spent in both contexts, right? You’ve been paying $20,000 a year or close to $100,000 for daycare. I think a little bit of, you know, maybe treating yourself is an important thing to do. But I think then you do have to align what goals you have, and what you want to achieve by the time you hit retirement and really start to focus on those. So if that is paying down your mortgage, then you know, that can be something that you prioritize or if it is, you know, bolstering and making up for those years where you couldn’t contribute to your retirement savings, or contribute as much as you want into your retirement savings.

ROMA: So the time when you decide you’re going to have a baby, especially the first one, there’s a lot going on, because you have to think about all of the stuff that you need, you’re getting the stroller, you’re getting the crib, and then you’re also getting ready to take time off work. And in the meantime, you’re also still required to make mortgage payments and pay your utilities and all those other things, or rent. Is saving ahead for daycare thing like do you see anyone actually being able to do that, or…?

JANINE: I guess it depends how much in the future you’re planning for. So obviously, having a kid, you don’t always get to control when you get pregnant. So it could take multiple years for families to get pregnant. And in that case, you know, maybe it is something you start to save for free. Or if you’re thinking or you know, you want to have kids, maybe you set up a bit of an automatic savings transfer on a monthly basis for $100 a month and you know, over a number of years that can add up. But I think for people who do find themselves in, you know, a surprise pregnancy situation or they get pregnant very quickly. I think it’s challenging to save for daycare ahead of time because there is so many additional costs like strollers are like $900 apparently, which I did not know prior to getting pregnant and there’s just so many things that you have to end up paying for in your pregnancy. And then also when the baby comes there is a lot to pay for and you’re on a reduced income so I don’t see it a ton unless people have been kind of planning multiple years in advance.

ROMA: Okay, let’s say you’re super organized. And you either get a chunk of money or you’re committed to getting your financial house in order ahead of time and you’re able to do that. What’s a good system or way to save? You mentioned automating finances, which I’m, which I’m a huge fan of. How do you set that up? And what kind of savings vehicles are you looking at?

JANINE: Yeah, I’m also a huge fan of kind of letting the robots or automating things for savings plans, I think it’s fantastic. And it kind of allows you to not have to think about that on a monthly or a weekly basis. I think when you do set up that automatic savings, it should be going into a bank account, obviously, where you’re not paying fees on on that savings. And if you can find something with a higher interest rate, I know interest rates are super low right now. But if you can find something that it does have a higher interest rate, I think that that’s important, I would caution from putting it into the stock market or investing it if you’re going to need it relatively quickly.

I would definitely encourage people to look at some of the online banks that are available, because they do have that flexibility of being able to pull money in and out, but also giving you a bit of a higher rate.

ROMA: Are there ways to mitigate daycare costs? I’m talking about subsidies tax credits, can you run through those with us?

JANINE: Yeah, I think there are, obviously kind of based on your province, there are subsidies that can be available for lower income earners. But I think that they would be probably lower than the average income for a Canadian, you are also able to claim your childcare expenses. I think it’s up to $8,000 on your tax return to get a tax credit, but the problem with tax credits, is you have to pay that money first. And so then you’re not getting anything back until the following April when you file your tax return. So it doesn’t help families in the in the moment.

ROMA: Right, but you could get that money back and then for instance, put it in an account for next year is daycare bills?.

JANINE: Totally. If you know all the other stars align in your tax return and you end up in a refund position.

ROMA: Are you seeing people that are thinking, you know what, maybe we won’t have a second kid or maybe we had always thought we would have three but now we’re not sure. Is that something that you see happening?

JANINE: Yeah, I’ve had that conversation with a couple of my friends actually, who you know, they have kids that are a couple of years old and their family is looking at whether or not it makes they want to have another kid or whether they can afford to have another kid, which is really unfortunate to have to look at it from that lens. You know, I’ve always said, in our household, well, we will have kids until our family feels full. But when you’re adding in an extra $1500 a month or, you know, I’m going to go on mat leave, and we still need care for our first, how do you balance that on a reduced salary?

ROMA: What kind of sacrifices, during the pandemic, it’s been well-documented that a lot of us are trying to do our jobs and look after kids and it’s incredibly difficult and daycare is huge part of that equation. How are families coping?

JANINE: I would say not well. I know that it is very, very challenging to have your kids at home while you’re trying to work and I think this has been what has led to so many women leaving the workforce, this goes to the wage gap and they look at who is the lower-income earning spouse, it’s usually the woman and taking step out of workforce is an unfortunate reality when the kids are home all the time because the schools are closed and daycare is closed. So, it is a real eye opener for families.

ROMA: And what are the repercussions for a family if you have financially-speaking, both from the woman’s career path and her compensation and also for meeting their financial goals?

JANINE: I mean, taking away a second income is definitely going to slow down those financial goals. And when we look at women leaving the workforce, it’s not just her salary that she’s giving up. For every year that a woman is out of the workforce, she actually gives up on average $200,000 in lost wages, lost wage growth. So potential raises and promotions, benefits, as well as you know, retirement matching that an employer may offer. So when you look at taking a step back from the workforce for five years, to get your kid into grade one, that’s almost a million dollars in lost wages, lost wage growth, and all of those things that we just discussed.

ROMA: It’s such a difficult time. And I think that I see all around me parents really struggling with all kinds of decisions like this, if the pandemic has shown us anything, it’s just how integral daycares and childcare is to keeping families working. And I mean that, you know, emotionally and I mean, that in terms of excelling at school, and I mean that in terms of being able to to function financially, properly. It’s just really about how limited our choices are.

JANINE: Absolutely. And I think that is why we continue to need to advocate for an accessible affordable daycare program across the country because we can’t work properly or at our full capacity without childcare.

ROMA: Thanks to Janine for joining us today and sharing her thoughts. It’s especially valuable because she’s a new mom and she’s in this situation herself. Now, here are my three takeaways.

  • If you are thinking of stretching to buy a house and want to have kids, remember to leave room for daycare. Do that math and make sure you can afford to pay for both each month.
  • Make sure to get a receipt for your child care. If you are eligible, you may be able to claim those expenses and get money back in tax refunds.
  • If you can’t meet all of the financial obligations during the day care years, it’s okay. Try to avoid going into debt and once your child is out of daycare, re-allocate that money to your other savings goals. Then start power saving.

ROB: Thank you for listening to Stress Test. This show was produced by Hannah Sung and Latifa Abdin.

Audio post-production by Kyle Fulton and Carlay Ream-Neal.

Our executive producer is Kiran Rana.

ROMA: Thank you to Kristi in Victoria, B.C. and Janine Rogan, founder of the Wealth Building Academy.

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