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my best money advice

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During financial literacy month, Canada's top money bloggers are sharing their best piece of advice.

While I'm signing a $1,600 daycare cheque, my 21-month-old daughter is growing out of her new pants. Spending nearly $20,000 a year on daycare is financially painful. Watching my toddler's lengthening limbs shoot through clothing in months strains my finances too.

As a thrifty gal with a popular money blog, I'm the first to admit that raising kids ain't cheap. I knew taking time off to care for a newborn baby would be expensive but I just didn't realize how costly the total tab would be in the toddler years, and I'm only getting started.

Many child-raising studies cite the annual expense per kid from $10,000 to $15,000 until 18 years of age. A recent report by the Fraser Institute counters this cost, lowering the grand total to a spectacularly thrifty bargain of $3,000 to $4,500 per year.

"It has never been easier, financially, to raise children in Canada," writes Christopher Sarlo, the report's author and an economics professor. Raising kids is so cheap using Mr. Sarlo's math that his $3,000 to $4,500 yearly range for raising a healthy child to age 18 could be cut further since he excludes "savings strategies such as home gardens, sewing and knitting clothing, couponing and taking advantage of sales" in the total child-rearing tally.

Are you kidding me?

Based on the Fraser Institute's bargain basement child raising numbers I'd sign up for a second kid, but my fledgling parental instincts tell me the institute got the math very wrong.

The report conveniently excludes the cost of daycare from the total tab. Big expenses like shelter, transportation, education and any "special needs" fail to be accounted for as well.

I too would like to conveniently exclude these costs from my monthly budget, but someone needs to pay $1,600 a month for daycare, cover the extra $600 to rent a larger apartment so my kid has a bedroom, and buy car seats to transport the tyke around town while meeting all Transport Canada safety requirements.

I reduce my expenses significantly by washing cloth diapers, buying second-hand clothing from thrift stores and shopping for groceries on sale, but my kid had a few "special needs" that required me to spit up $1,800 for baby formula during her first year. My daughter may also need braces for these things called teeth.

I don't begrudge spending the cash – my kid is pretty awesome and I love being a mom. What bothers me both as a parent and a financial writer is how minimizing and downplaying the real costs of raising kids can mislead couples looking to start a family.

The necessities cost money. Ignoring certain realities like shelter and the crazy cost of daycare won't make the expenses go away. If you want to raise a kid it is going to cost you. Curve balls can also happen in life, so it's a good idea to budget for special scenarios to avoid going into debt.

My best advice for future families is to do the math. Discuss with your partner what kid costs should be covered and which strategies may work for cutting back. Will one parent stay home and forgo earning an income? Are activities like hockey, music lessons, or scouts important? Will you pay for post-secondary education? Buying your teen an iPhone may be a necessity too – but that call is up to you.

So what does it cost to raise a child?

I'd say anywhere from $3,000 per year to a million bucks over 18 years. Do your own child raising math carefully and you'll have a little less stress paying for it.

Kerry K. Taylor is a consumer expert and financial writer. Her blog was voted Canada's Top Money Blog by The Globe and Mail readership.

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