7 Financial Tips New Parents Can Use to Stay Ahead

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Having a baby can change your world, literally! It’s not just about welcoming a newborn to your family, but a baby comes with both financial and time-bound commitments. A lot of couples feel the financial stress of becoming new parents. Here is a list of some of the most useful financial tips for new parents. Let’s get started!

1. It’s time to create a monthly budget

Do you have a monthly budget?

How do you track your daily expenses?

You’d be surprised to know that more than half of Canadians have no spending plan or monthly budget. If you’re about to become a new parent or have already become one, this is the first thing that you must do. 

Start by creating a list of your income streams. List all of your expenses, both essential and discretionary spending. Are you overspending? If yes, having a budget will help you manage your finances better. Make sure to add new expenses, such as: 

  • baby supplies
  • childcare expenses
  • additional premiums for health insurance
  • toys, and similar items. 

Having a budget will help you make better financial decisions.

2. Your discretionary spending will have to go

As a new parent, financial adjustments are the way to go. One of the first things to cut is some of your discretionary spending. 

Do you have a cable connection or a gym membership that you don’t even use? 

Do you really need to go out for dining every week? 

Create a list of your discretionary expenses and find out how much you’re spending every month. Every new parent can save a significant amount of money by simply cutting these expenses. You can redirect these funds towards a health savings account, retirement account, or your child’s college education fund.

3. Second-hand baby accessories aren’t all bad

Your expenses are likely to explode with a newborn. It makes sense to save money wherever you can. You can purchase used: 

  • strollers
  • cribs
  • toys
  • clothes, and several similar items

Don’t worry, your baby won’t know the difference, and your budget will undoubtedly breathe a little.

It’s best to look for the quality and utility of an item instead of the brand. You can try eBay, Craigslist, or even Amazon to purchase used or open, unboxed, returned items.

4. Claim child and family benefits through different provincial or federal programs

One of the major perks for new parents comes in the form of different provincial and federal benefit programs. Some of these benefits include Canada Child Benefit, Goods and Services Tax/Harmonized sales tax credit (GST/HST), provincial and territorial benefits and credits. In order to claim any of these benefits, you have to use the Automated Benefits Application along with the birth registration form of your newborn. 

You can receive up to $6,400 for each eligible child under six years and up to $5,400 for children between 6 and 17 years.

5. Keep an eye out for childcare expenses

Childcare is one of the highest costs you’ll face after the birth of your child. Recent studies indicate that you might have to spend over:

  • $1,500 in Vancouver
  • and $1,200 in Calgary every month

If you’re a working couple, daycare expenses will be necessary, so make sure to budget for it. Research reveals that daycare costs are often the second-highest expense for parents after rent or mortgage. The cost of childcare has risen dramatically over the past couple of decades throughout the country.

6. Find out more about HSA, FSA, and employee benefits

Having a child does have some financial benefits, such as tax deductions for specific contributions or employee benefits for the newborn. The first thing to do is to identify any employee benefits that you qualify for after becoming a new parent. Most employers offer HSA or FSA under employee benefits. Find out if you can open a health spending account or HSA through your employer. It is important to note that you must have a high-deductible medical plan in order to qualify for a HSA.

HSAs can help you cover out of pocket qualified medical expenses, and it’s a non-taxable account, so that’s a win-win. The same goes for a flexible spending account or FSA that can cover both health costs and pay for wellness programs, such as a gym membership.

7. Now is the time to create an emergency fund

Financial emergencies are a part of life. One must always save for a rainy day. 

However, a survey commissioned by Research Financials indicates that 49% of Canadians do not have any emergency savings. 

As new parents, having an emergency fund is critical for the wellness of your entire family. You should be able to handle a financial crisis, especially health issues. Having an emergency fund ensures that you’ll be able to prevent expensive debt or credit card interest in case the need arises.

The Bottom Line

A child is a big responsibility. Your bundle of joy comes with multiple financial obligations, and as parents, you must be ready to fulfill these responsibilities. It doesn’t require a genius to get the financial planning right. The key is to take preemptive actions and be financially ready for family extension.

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Jenna West

Jenna West has built up a list of published work on various global recognized websites like RE/MAX Canada, Freeman Audio Visual Canada and now carries the title of Freelance Content Manager for Smarter Loans. Jenna adds creative value and fresh perspectives on all things finance, especially pertaining to millennials, and has a natural knack for turning a page full of words into a visual reading experience.

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