Saving for Baby:
Costs, Ideas and Plans
Planning a family may also mean making a savings plan to manage all the goods and services you need for baby, and to prepare when your income might shrink when you’re home with your bundle of joy.
Raising a baby is a constant swing between joy and anxiety; happiness at your baby’s first smile, panic at her first cold. Kids also cost money, from their cute little socks to bills for daycare. Every kid and family situation is different but if baby’s on her way, you may soon be dealing with less income and higher expenses.
Do you need a doula — up to $30-$40 an hour, depending on the service — when baby comes home? A breast pump and milk storage kit, up to $450? How many sleepers — up to $45 each — will baby need? And do you need to think about saving for university already?
Here’s a range of costs, options and ideas parents could face in the first year:
How to Save
Despite the best-laid plans, says Steve Inskip, father of two small boys and Regional VP who oversees a team of Financial Planners for TD Wealth, few of us get to plan exactly when we are going to start a new family. However, parents-to-be need more than nine-months’ notice to ensure we have all our responsibilities covered.
Inskip says saving for a new child — as with saving for any large objective — begins with a goal and evolves into a plan. While we all feel the need to ‘save,’ a concrete and disciplined approach is more effective than slipping $50 into a jar when the mood strikes you.
Time Off Work
Many people enjoy maternity or paternity benefits if they have what the government defines as insurable employment and meet other criteria for government benefits. An employer may also offer supplementary benefits for leave around a child’s birth. However, parents may run into tight money situations if they are self-employed or do not meet the government’s criteria for the benefits. Consult an advisor to see how saving plans can help you have time away from work to spend it with your new child while allowing you to pay your bills at the same time.
Parents can make detailed plans on what they want to feed their child — unfortunately the plans may last until baby decides otherwise. Parents should be prepared for changing inclinations with often abrupt switches between feeding styles.
Breast feeding: Manual pumps sell for as little as $6.00, while at the upper end, electric pumps and milk storage kits can cost more than $450.
Formula: Different brands of formula have different prices — for instance, one 629g tub may cost $18.99. Parents should prepare for increased appetites as babies grow — a food budget for a two-month old won’t be the same for an 11-month old.
Solids: A 128 ml jar of meat and potatoes is $0.99.2 Again, different brands offer a wide variety of options and prices. Parents may also prefer to make their own baby food.
Child Care Costs in Canada
There’s a large variation in the child care needs for families depending on their work situation, family support and where they live in Canada. In Quebec, child care is largely subsidized, but outside the province, prices rise steeply from $650 a month in Winnipeg to $1,750 in Toronto.3 Prices may decline once the child turns one. For nannies, it varies depending on whether the nanny is live-in or out, if the nanny is domestic or foreign, or if the nanny works overtime hours. According to CanadianNanny.ca, nannies’ rates range from $22.35 per hour to $12.72.4 Again, pre-planning and saving can help prepare parents for these costs.
Finished High School Already!
University or college is expensive and you can’t start saving early enough. For students living away from home, fees and costs can total up to $20,0005 a year, and a child born in 2018 will likely face even higher expenses when they leave high school in 2036. Fortunately, there are several ways to manage the costs of school, chiefly the Registered Education Savings Plan. The RESP provides a tax incentive and allows funds to be invested and accumulate as soon as your baby gets a Social Insurance Number. It also includes the Canada Education Savings Grant that can also be invested. Speak to your advisor to find out the details on contributions and investments.
How We Got the Prices
We went online (window) shopping and selected common-place items that most people we need during the first year. We selected the highest and the lowest prices to give a range of what you may need to spend. Note prices are in Canadian dollars, recorded between April and June 2018. All prices are subject to change.
— Don Sutton, MoneyTalk Life
- Jen, How Many Diapers Does A Baby Use In The First Year?, thesuburbanmom.com, accessed June 7, 2018, www.thesuburbanmom.com/2014/02/17/how-many-diapers-does-a-baby-use-in-the-first-year/↩
- Food and formula prices from Loblaws.ca↩
- David Macdonald and Martha Friendly, Time Out: Child Care Fees in Canada 2017, December 2017, accessed May 10, 2018, www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2017/12/Time%20Out.pdf↩
- Trisha Heathcote, How Much Does a Nanny Cost?, Canadian Nanny.ca, Sept. 14, 2016, accessed May 15, 2018. www.canadiannanny.ca/ how-much-does-a-nanny-cost#AverageNannyRate↩
- Mark Brown, The Cost of a Canadian University in Education in Six Charts, Macleans, April 1, 2018, accessed, May 10, 2018, www.macleans.ca/education/the-cost-of-a-canadian-university-education-in-six-charts/↩