How to Avoid the Financial Pitfalls of Parenthood
By Devora Bellaiche

Have you always dreamed of having children? Then wakeup and create a financial plan because that bundle of joy will cost you - a lot.

Pregnancy and the baby’s first year

According to the province of Manitoba, you will need an additional $10,000 from pregnancy to your child’s first birthday. This money is used for things like maternity clothing, healthcare expenses and miscellaneous items.

TIP- To make $10,000 more manageable, you can create a short-term money market or savings account dedicated to expenses for the first year. If you and your partner each contribute $130 per month you will have saved enough in three years. Try to keep the account open after the first year and use it to contribute to later expenses like hockey lessons or summer camp.

“Let’s face it: having children is expensive,” said Dennis Tew, chief financial officer of Franklin Templeton Investments Corp. “It makes sense to start saving early to give your child every possible advantage.”

From a toddler to a child

If you and your partner both plan on returning to work after maternity/paternity leave, expect to pay between $200 (Montreal) to $800 (Toronto) per month and per child for daycare, claims Statistics Canada.

TIP- Start taking advantage of the Universal Child Care Benefit that was introduced in 2007 to help parents pay for child care. UCCB offers parents $100 per month for each child under six. To apply for UCCB visit www.cra-arc.gc.ca.

The teenage years

It takes an average of $10,000 per year to clothe, feed and keep a child healthy in Canada according to the province of Manitoba. If you and your partner want to pay for your child’s post-secondary education too anticipate paying a lot more than Statistics Canada’s 2007 tuition average of $4,500.

TIP- Create a Registered Education Savings Plan as soon as possible for your child. This plan will not only help you save money for his or her schooling, but it will make you money. The federal government will give $20 for every $100 you save until the RESP has reached its maximum of $50,000. Every time someone gives your tot money for a special occasion, set aside those dollars to accumulate.