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A Family Growth Plan

Nothing can prepare a new parent for sleepless nights and endless diaper changes. But there are ways to prepare financially for a new addition.

According to MoneySense.ca, the average cost of raising a child to age 18 is a staggering $243,660. That’s $12,825 per child, per year – or $1,070 per month. And that’s before you encounter university tuition fees.

Childcare, diapering, feeding, medicine, strollers – they’re all expenses that can significantly impact long-term savings goals. Fortunately, these savvy financial strategies can help growing families plan ahead for a debt-free future.

Budget for baby

Now’s the time to determine how your income will be impacted by a new arrival. How will maternity leave and part-time hours diminish your wages? What can you expect to spend on up-front costs such as diapers, formula, and medication? How much will you need to save for childcare, violin lessons, and birthday parties?
By creating a detailed financial plan, you can determine how a child will affect your bottom line, and the steps you’ll need to take to save for essentials like education and retirement.

Borrow for tomorrow

Even the best-laid plans can lead to unanticipated expenses. Whether it’s replacing a roof on your family home, or hiring a high-priced math tutor, these unforeseen fees can challenge your financial well-being. Fortunately, a personal line of credit can help. An alternative to credit cards, a personal line of credit provides parents with cheaper rates, greater financial flexibility, and repayments that can be as low as the monthly interest. The best part: if you don’t use your personal credit line, you don’t pay.

Invest in education

One of the smartest investments you can make is in your child’s education. University tuition fees are rising with Statistics Canada reporting that, on average, undergraduate students paid $6,191 in tuition fees in 2015/2016 compared with $5,998 a year earlier. The good news is, a Registered Education Savings Plan can reduce the financial burden by encouraging parents to start saving early. Benefits include tax-free RESP savings and high interest earnings. And with funds held in trust, parents can rest assured that their investment is safe and secure.

Some children may also be eligible for education savings grants and bonds which let parents make regular contributions.

Select a policy for protection

Parents need to make sure their children are protected no matter what life throws their way. The right insurance policy can help cushion the costs of raising a family in the event of a death, disability, or even a loss of employment. Coverage may vary from replacing income and covering funeral expenses to helping with outstanding debts and minimizing how investments and real estate are taxed at death. The objective is the same: to protect loved ones and their finances when faced with tragedy.

Calculate retirement

It’s tough to imagine your retirement years when surrounded by squeaky toys and baby lotion. Yet it’s never too early to plan for your financial future. A retirement planning calculator is an ideal tool to help you determine how much you’ll need to save to reach your goals – and how to make smart decisions in the meantime.

 Speak to a Meridian Advisor to help you plan for all your life events.