Bridget Eastgaard runs MoneyAfterGraduation.com, a financial literacy site dedicated to helping millennials get smart about money.
I turned 30 last week.
You wouldn't know it, because my life looks exactly as it did when I was 20. I'm in the scrappy grind of trying to start a new career. My rented apartment is sparsely furnished, mostly with pieces from IKEA. And I am not a mother.
I thought by now I would be, but the truth is, I haven't had time for parenthood yet. Or should I say, I haven't had money. For most of the past decade, I was a student, and then for the years I wasn't, I was paying my student loans.
My husband and I are a millennial statistic: highly educated, urban renters with only one car between us. Like most of our friends, we married in our late twenties and have opted to put off having children until "later" – an ambiguous future date when we will somehow afford them. Our friends have similar excuses:
"When our student debt is paid off."
"Once we buy a house."
"When I get a promotion."
But for many young people, waiting for these milestones means putting off childbearing too long. Eventually, you simply have to choose a less-than-ideal time over never.
For those feeling overwhelmed by the costs of having children, but wanting to start a family in the next few years, here are some of the ways you can prepare your finances:
- Plan around maternity and parental benefits. In Canada, you have to pay into employment insurance for at least one year in order to qualify for maternity and parental benefits. If your employers top up maternity pay, they likely also have a minimum employment tenure to meet in order to qualify. Research how much time off and what benefits will be available to you. Then, if possible, plan to start your family only after you qualify for the maximum benefit from the government and your employer.
- Start living as if you’re already a parent, and bank the difference. If your parental leave benefits are going to reduce your income, start living on a smaller budget now and put the difference in a savings account for when the baby arrives. Not expecting a reduction in income? Imagine you have other expenses, such as childcare and diapers, and save that amount instead. The sooner you get used to putting a portion of your pay towards your children, the better prepared you will be to do so when they finally arrive.
- Get rid of all high-interest debt. While you might not be able to totally eliminate your student loans or car payment by the time you want to start a family, you can and should get rid of any lingering high-interest debt, including credit cards. The less you have to pay in interest when you have a family, the more you will have to do things for your little one, including starting a registered education savings plan.
- Make your baby budget now, not later. Many new parents are caught off guard by the amount of baby gear they need in the first year. The average cost to raise a child until the age of 18 is now $243,660, but frugal parents can make do with much less. Shop around now to get an idea of what you will need to buy new, what you can purchase secondhand, and how much you will need to save to afford it all – without the urgency of a wailing child in the background.
- Remember the Canada Child Benefit (CCB). The Liberal’s new CCB plan supports Canadian families with children by providing income-based monthly payments to help with child-rearing costs. For households with children ages five and under, the maximum benefit is $6,400 a year. The benefit declines as income rises, with no benefit for a household earning $192,000 or more a year. The maximum benefit for children 6 to 17 is $5,400 a year, and declines with increases in household income up to $160,000. Remember to include the CCB amount you qualify for when planning your family budget.
Although there is "never a right time" to have a family, there are some times that financially are better than others. By making a budget, saving and adjusting expectations, Millennials can have the families they desire without going broke. My husband and I certainly plan to.