Financial Must-Do’s to Prepare for a New Baby so you can enjoy your newborn with the peace of mind that comes from good financial planning!
Preparing to be a parent for the first time isn’t just itsy bitsy clothes, ultrasound photos and decorating a nursery; it should also involve a lot of financial preparation. Once you are finally holding your baby in your arms for the first time, the last thing you want to be worrying about is all of the financial tasks and decisions you need to make.
As soon as you decide to start planning for a family, you will want to prepare ahead of time and get your financial affairs in order. Let’s face it – handling these issues while you are bleary-eyed is almost guaranteed to go wrong, but it is never too late to get on top of your financial affairs.
I’m going to lay out here some of the most important financial must do’s to prepare for a new baby that will get you prepared for whatever life may throw your way from pregnancy to College.
Before Getting Pregnant or in Early Pregnancy
1) Draft your Pre and Post Baby Budget
The most important part of any game plan is knowing what your goals are so you can determine how to best achieve them. Having a baby is expensive, so you need to forecast your expected budget. Start by comparing your current income against all your current expenses. If your expenses are great than your income, you will want to weed through your expenses and see what you can cut out to cover child-related expenses such as diapers, clothing and eventually daycare. This is a good time to set a limit on necessary and optional buys to try and keep spending under control.
2) Deal with Outstanding Debt
If you have debt, now is the time to deal with it. Get it paid off as quickly as possible so you can focus on your family’s financial goals.
3) Start an emergency fund
If you don’t already gave a “rainy day fund”, start saving money for an emergency fund to help you deal with any unexpected expenses. Your goal should be to have at least three to six months’ worth of living expenses covered and saved away. (A TFSA is a great option for this as you can let it sit and accumulate interest.)
4) Discuss Parental Leave Options
Will one of you take all of the available leave or will you both be taking leave? In many cases, it makes sense for the parent who makes the most money to work while the other parent takes all of the available leave possible. You will want to request a Record of Employment from your employer so you can apply for maternity and parental benefits once you decide. Don’t forget to apply for Employment Insurance maternity and parental benefits as soon as you stop working as there is a waiting period before payments start.
Within baby’s first 30 days
Once your baby has arrived, there are items that will need to be taken care of.
5) Apply for a Social Insurance Number (SIN) for your Baby
Your child will need a SIN to be eligible for government benefits and programs, including Registered Education Savings Plans (RESP). This can be done at the same time as applying for a Birth Certificate and provincial health card for your child.
6) Apply for child and family benefits
The Canada Child Benefit will be rolling out in a couple of months – it will be a tax-free, monthly payment made to eligible families to help Canadian families raise their children. Currently, you can apply for the Canada Child Tax Benefit and the Universal Child Care Benefit.
7) Review your Employer’s Health Insurance Plan
Add your child as a dependant as soon as you can after birth. You do not want to be caught with a sick baby and no coverage for medical costs not covered by provincial healthcare.
8) Begin Planning for Child Care
Start looking into child care options now to find the best option for your budget and to get on what can be dauntingly long waiting lists. You may be eligible for child care subsidies so you will want to look into that as well.
Beyond the first month
9) Consider Saving for their Education
Getting a post-secondary education can be costly so you may be considering helping your children out with this cost. If so, you can make this cost manageable by starting to save early and starting now to setup your child for financial success. Open a Registered Education Savings Plan (RESP) and start saving – the federal government will add to your savings when you contribute so do take advantage of that!
10) Continue Retirement Planning
Once your baby arrives, it is easy to forget your long-term savings goals. Be sure to stay on top of your retirement plans so you do not end up needing to rely on your child for support or worse end up living in poverty on a small pension.
11) Do your Estate Planning Now
Planning for the future when you have a family is crucial, and estate planning is an often overlooked part of providing for your children. We all like to think we will live to 100 and that we have plenty of time to deal with estate planning. Unfortunately, tragic things do happen, and you want to ensure your child will be taken care of in the event that you die.
Writing or updating your will is only one part of estate planning, it is an excellent place to begin. If you do not have a will, you leave it up to the courts to designate a guardian for your children and the division of any assets.
Consult with a lawyer or financial advisor to determine how to best minimize estate fees and taxes, review your estate plan, set-up power of attorney, and name a guardian for your children in the event that you and your spouse die or become unable to take care of your family.
12) Shop for Life Insurance
Becoming a parent is probably the best reason to buy life insurance for the first time. One of my biggest worries as a parent used to be wondering what would happen to my children if one or both of us dies. How would we afford funeral expenses, or even basic living expenses if my husband died? How would my husband be able to afford those expenses plus child care should I be the one to die? These are troubling thoughts to have as a parent, but you can put these worries to rest, as I have, by buying life insurance for both you and your partner.
When you do shop for life insurance, you need to determine how much income you will need to replace and you will want to be sure you have coverage for anticipated future expenses like college or paying off a mortgage. Even stay-at-home parents should have life insurance because in their absence a surviving spouse would likely incur higher costs for things such as child care.
You will also want to buy the insurance outside of your employer so that you can take it with you wherever you may go. People tend to go from company to company these days rather than moving up the ranks through a single company, so this is a valid concern.
Don’t know where to start with Life Insurance?
Some of you might be worrying that you can’t get life insurance coverage because of a medical condition or because you are not willing to take a full medical exam. Perhaps you simply just don’t understand how life insurance works or find it overwhelming to come to a purchasing decision. Unfortunately, this isn’t a decision you can afford to put off but calling Canada Protection Plan for a no-obligation quote is a quick and easy start towards peace of mind.
Canada Protection Plan is the leading provider of No Medical and Simplified Issue Life Insurance and offers both permanent and term plans, for coverage that can fit your specific needs. Coverage starts from $1,000 up to $500,000 plus up to an additional $250,000 if death is accidental and ages 18-80 can apply.
I recently called Canada Protection Plan for a free no-obligation life insurance quote and was pleasantly surprised by how friendly and patient the representative was. The representative asked me a few simple questions and was then able to offer a couple of personalised options for life insurance plans that would work for my situation and budget within a couple of minutes of our 15 minute call. He was then happy to discuss in simple terms the plans available along with the pros and cons. He was very patient, and I felt very comfortable discussing my options with him, and most importantly I did not feel pressured at any point to move forward with an application before I was ready to make a decision.
Right now is the perfect time to get the peace of mind with benefits you’ll love by calling Canada Protection Plan for a life insurance quote today!
Disclosure: Although this post has been generously sponsored by Canada Protection Plan, the opinions and language are my own.
Elizabeth Lampman is a coffee-fuelled Mom of 2 girls and lives in Hamilton, Ontario. She enjoys travelling, developing easy recipes, crafting, taking on diy projects, travelling and saving money!