It’s no surprise that kids are expensive – from purchasing a stroller to funding an education, the costs add up. So what can parents do to combat the hefty price tag that comes with starting a family?
On this episode of Ratehub’s Real Money Talk Podcast, Tyler invites Sandra Martin, Moneysense’s Editor-in-Chief, and Scott Affleck, Ratehub’s VP of Product, to discuss financial tips for parents with Lisa Van De Geyn. As the author of Babies: How to Afford Your Bundle of Joy, Lisa shares her expertise to help parents make smart money decisions for their children.
What don’t parents understand about money?
When it comes to raising kids, Lisa shares that parents don’t usually plan for the money aspect. You think about the crib, the car seat, and the birth plan, but the total cost of everything doesn’t cross your mind such as new clothing every few months, diaper disposal bins, and the wipes, man the wipes. And in a billion-dollar baby industry, there’s things that you won’t even need – such as a wipe warmer – so it’s important to understand what’s necessary in your case.
Lisa mentions one common misconception that parents have is that everything needs to be brand new. By taking advantage of siblings and friends, you can get a lot of necessities, such as maternity clothes, without having to break open your wallet.
As a parent, you can also learn from other people’s past mistakes. If Lisa could have a do-over, there are a few things Lisa would do differently, including:
- Looking for more deals and shopping for sales
- Doing more research on what things actually cost
- Budgeting for the unexpected expenses (e.g. formula)
The cost of childcare adds up quickly, especially if your kids need the service five days a week. Lisa shares that a friend of hers was able to reduce her childcare expenses substantially with the help of family.
“A friend of mine ended up saving money because she was able to get her mother to watch her daughter one day a week, her mother-in-law to watch her daughter one day a week, and then she put her in day care for the three other days – and that saved a ton of money.”
Plus, you may be able to write off childcare expenses as a tax benefit. The government sometimes changes their policies, so a quick Google search of tax benefits within your city can surprise you.
Going back to work
As a new parent, going back to work after maternal or paternal leave can be a tough decision to make, especially with factors such as daycare and salary to consider. For Lisa personally, she shares that her plans changed. “I one hundred percent thought I was going to stay at home and be with my kids. And I realized after maternity leave, I couldn't do it. I loved what I was doing at the time.”
Making financial long-term decisions can benefit you in the future. By doubling-down on her mortgage, Lisa was able to move closer to her mom which ultimately saved her the added expense of childcare when she decided to go back to work.
Saving for your child’s education
Parents also need to think about the big expense down the line: education. An RESP is a great way for parents to invest early-on, and Lisa asks her family members to contribute towards her kids’ RESPs, instead of giving conventional birthday or Christmas presents.
However, Lisa emphasizes that opening an RESP as soon as possible isn’t something parents should feel guilty about. “All the experts told me that you should do it basically the second your child has a social insurance number. I felt that if you even registered their birth and did everything you were supposed to at that time, then you were ahead of the game. There's so much on your plate. Being a new parent – you’re overwhelmed.”
As a parent, it’s also important to understand you don’t have to be responsible for covering the full cost of your child’s education. Getting your kids into the habit of saving for their own education through a summer job, part-time position, or side-hustle (such as babysitting) can help teach them the value of money.
Raising money-smart kids
Lastly, making money-smart decisions to finance a family is important, but so is teaching your kids to make these decisions themselves. Doing money-related tasks with your kids, such as going grocery shopping or paying the bills, can expose them early-on to good spending habits.
Lisa also believes that teaching your kids to give back to others is important. She does so by giving her kids an allowance of $5 dollars a week: $2 for saving, $2 for charity, and $1 for spending. “I do like the idea of reminding them that there is money that they need to save and they are lucky, so they should give to charity.”
To hear the entire conversation with Tyler, Sandra, Scott, and Lisa on financial advice for parents, tune in to your favourite personal finance podcast, Real Money Talk. And don’t forget to check out Lisa’s book, Babies: How to Afford Your Bundle of Joy, for more financial advice for parents.