First come the congratulations. You're pregnant! It's an exciting time as you reveal the happy news with family and friends.
Then reality sets in, and you need to start preparing for the arrival of your baby.
First you'll need a crib, and a car seat. What about a stroller? Don’t forget to add a bouncy chair and baby carrier to the list.
Did you set up that RESP yet? Your child will need a social insurance number first. Add more to-dos your list.
This is just the beginning. Your little bundle of joy is only going to get more expensive. In the last two years, childcare costs have risen faster than inflation across Canada, and parents will tell you about exploding grocery bills, or the sticker shock of summer camp. Your savings may stall; Retirement Savings Plan and Tax-Free Savings Account contributions might be put on hold. Some parents may dip into credit to cover expenses.
As your due date nears, people will offer plenty of parenting advice, but few will discuss the very real financial impact of expanding your family. Not many parents are willing to admit they're having trouble making ends meet, fighting with their partner about it, or, confide in you about the shame they feel over mounting debt. So how can you feel confident about your finances during one of the most emotional times in your life?
Like any major life change, meeting with a financial advisor to discuss your shifting needs and priorities will arm you with a plan, so that you're not making decisions based on hijacked emotions and sleep deprivation. And if you find yourself in a situation where you need to use credit, it's a good rule of thumb to find the approach that will cost you the least in interest and fees.
Tips to help you stay financially confident as a new parent
1. Plan for the expenses in the early years
If you plan to take parental leave, trying to find financing at a time when your expenses are increased can be daunting. And once you head back to work, you'll likely need to prepare yourself for daycare or after-school care. Having a plan to replace your income and a budget is important; a line of credit with flexible payment options could help. Use what you need, only when you need it, and pay it back. Keep your eye on the prize – to pay as little interest as possible.
2. Switch from credit cards with perks to lower-interest credit
Lower rate credit cards could be an option to help take some pressure off until you can pay down your balance in full. The better your credit score, the better chance of approval for a lower-rate card.
3. Consolidate
If you find yourself in a debt consolidation situation – where you're struggling to pay the minimums on your cards and bills are being paid late; you could look at the equity in your home to help you out of the red. It's not ideal, but if you have this option talk to your financial advisor to fully understand your situation, and make a plan.
Remember, you're not alone
It's expensive to raise a child. It's now pegged to be more than a quarter million in today's dollars – and a good chunk of those expenses are attributed to childcare. In reality, sometimes there just isn’t enough cash coming in. By not treating this as a dirty secret, getting financial advice and talking to others about the pressures you face, you may feel better about your situation, while allowing others to be more open about theirs.
Having kids is a gift but it's also one of the most challenging experiences of your life and one that could deflate you financially. Getting advice, and feeling confident that your expenses, savings and investments are on track during the early years, will give you more mental and emotional capacity to enjoy your kids, and be the parent you want to be.