These are some of the costs that go into raising a kid in Vancouver
Bringing a child into the world is an exciting time, which is something you should remember when you’re thinking about how exactly you’re going to pay for one in Vancouver.
Between the cost of rent and rising inflation, planning finances for yourself is already hard enough, let alone a child. Luckily, you don’t need to have everything figured out, because there are plenty of resources out there, like Coast Capital’s Help Hub, that will help make sense of your finances.
To help you navigate your finances as an expecting parent, we partnered with Coast Capital to break down what costs you can expect as you look ahead to raising a child in Vancouver.
The bare essentials for your baby
Having a baby is going to fill your life with joy, but can, unfortunately, be the most costly time in a child’s life.
For new babies, you know you’ll have certain essential expenses you’ll need to cover while you support their growth, safety, and development. There are all your nursery essentials like a crib, changing table, and baby monitor; transportation items, such as a stroller; and kitchen essentials, like a high chair and bottles.
Looking into these costs early can help you start to get a feel for what you can afford and how much money you need to save before your child even enters the world. While you’d ideally want to buy these essentials new, doing your research and planning ahead could help you find suitable second-hand options.
Planning for your child’s future
Once you get your baby essentials down, it’s time to start thinking about the fixed expenses associated with raising a child.
Child care will be something that you’ll need at some point, and while it can become a costly expense, averaging around $1,400 a month, the BC government offers several subsidies that can help curb this cost.
You’ll also want to consider factoring in regular contributions towards your child’s future as part of your fixed recurring costs.
For example, you could start a Registered Education Savings Plan (RESP) for your child as soon as you can. For every dollar you invest in an RESP, the government contributes $0.20. Lower-income families qualify for the Canada Learning Bond — giving you an initial payment of $500 for the first year the child is eligible, plus $100 for each additional year of eligibility, up to age 15, for a maximum of $2,000.
Because the amount grows tax-free until your child needs it for post-secondary education, it’ll benefit you in the long run if you start contributing even a small amount regularly. You can even contribute the child tax benefit you receive, which means you’re contributing no money out of pocket.
Spending on the things you can’t plan for
Regardless of how much planning you do before your child gets here, children often have their own plans.
Maybe you had to transition to solid foods earlier than you were expecting, or all the clothes you just bought don’t fit because they’re growing too quickly. Regardless of what you’re budgeting for their clothes and food, children unfortunately require a lot more than you’d think.
It’s always good to have money set aside for the unexpected rather than play catch-up on these variable expenses, so you can hopefully save a little extra to put towards other expenses.
Don’t forget about you
There’s no doubt that children come with some overwhelming costs, but let’s not forget that you also need to eat and be clothed, and I’m not talking about the leftover cereal your child “accidentally” spilt on your shirt.
Reviewing your personal budget and expenses before your child arrives can help you take stock of where you’re at financially and will help inform your child’s budget moving forward.
It’s also helpful to see where you’re maybe spending your money in excess so you know where to cut back in order to create a little extra room for yourself and your little one.
Going on parental leave
It’s important to remember that, for the first year or so of your child’s life, you’ll probably be going on some form of parental leave so you can, you know, take care of the tiny human.
The standard, 40-week, average insurable income for the person who gives birth is 55% of their weekly income for 15 weeks, for a maximum of $650 per week. There are also options to extend your parental leave to cover up to 69 weeks, which reduces the percentage to 33% for a maximum of $390 per week — though these amounts change quarterly and are adjusted for inflation.
This reduced income is going to have to factor into an already expensive time in your child’s life, and you want to make sure you start receiving payments the minute that little cherub enters your home. Luckily, you can apply for parental leave with the government as early as 12 weeks before your due date.
Being smart about your debt
If you need a little help with your finances after a child, you’re not alone. Around a quarter of new parents take on some form of debt to afford the expenses during their child’s first year.
Going the debt route may be necessary for the short term, but you always want to think about the long-term effects that might be associated with the kind of debt you’re taking on. Searching for low-interest debt options, like a line of credit, should always be the priority, and limiting it to just your essentials is important to manage your debt going forward.
You should also assess any outstanding debts you’re already paying off, and prioritize them according to the importance and interest rate while making the minimum payments. Always start by paying off your most expensive debt first, which is usually credit card debt.
If you have multiple credit cards, you can use the “waterfall method” to focus on paying off the smallest balance first while still maintaining minimum payments on all cards, then move to the next highest balance after that amount is paid off.
Interested in learning more about how you can make the most out of your finances? Visit Coast Captial’s Help Hub to get all your questions answered.
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