Financial checklist when growing your family

Prepare for the birth/adoption

• Estimate any medical/adoption costs associated with gaining a child. Take some time to understand what costs your provincial/territorial healthcare and employer benefits will cover, then estimate if you’ll have to pay out of pocket for gaining a child.
• Estimate any one-time expenses associated with making space for a growing family. Consider whether you need to move or make upgrades to your home, buy a vehicle with more space, get furniture such as a crib/bassinet or changing table, or purchase equipment like a car seat and stroller.
• Plan to take time off work (recover from birth, support your partner, bond with your child). Common options to help you take time off work include:
  • Employment Insurance (EI) maternity and parental benefits
  • Paid family leave
  • Paid time off (such as sick and vacation time)
  • Short-term disability insurance
  • Unpaid leave

Many families or stagger the leave of dual-income partners. What’s available and how the options coordinate vary by employer. Make sure you understand how much leave is available, how much you’ll be paid, and whether your job is protected.

• If you have a shortfall or questions about the costs associated with growing your family, a financial advisor can help you prepare financially through budgeting and other scenario planning.

Protect your growing family

• Review your insurance and adjust where needed.
  • Life insurance*: You may need more life insurance to cover a larger family. Your financial advisor can help determine an amount and type of life insurance specific to your needs. Examples of types of insurance include term insurance (which can potentially be more affordable)and permanent insurance.
  • Disability insurance*: Having disability coverage may become more important if you have a larger family to support. Make sure you have strategies in place to protect your income against both a short-term and a long-term disability.
• Create or review your estate plan. An estate plan helps ensure your children have the care you would want them to receive if anything were to happen to you. You can do this anytime, but because time becomes scarcer after a new child joins the family, it’s helpful to at least start this before your new addition arrives. An estate-planning lawyer can help with this.
  • Work with your lawyer to create or update a Will, naming a guardian for your child.
  • Review/add beneficiaries to RRSPs, TFSAs, life insurance, annuities and other accounts.

Update your budget

• Determine how you’ll address child care. While some aspects of your budget may be hard to predict until your newest addition arrives, child care is an area you should start figuring out immediately. Start by talking about the kind of care you want. If relying on family or friends, you’ll want to understand their availability and whether you’ll need to supplement with other kinds of care. If someone is reducing paid work, start thinking about adjusting for the loss of income. A financial advisor can run the numbers to illustrate the financial impact. If you plan to use paid caregiving, start looking into options well before you need it. Many areas have a shortage of child-care options, resulting in long waitlists and high prices. Starting early can expand your available choices and help you factor the cost into your budget.
• Incorporate other ongoing costs and look for opportunities to cut spending. Children come with ongoing expenses that change over time. As one expense rolls off, another tends to start or increase. Make sure you have room in your budget for these expenses. Because your child-related expenses will rise, you may want to look for opportunities to reduce your spending elsewhere. You may find savings naturally as your day-to-day financial priorities shift.
• Adjust your emergency fund based on your new family size and budget needs. We generally recommend saving three to six months’ worth of total expenses in your emergency fund. It will likely need to grow for two reasons:

1. Your monthly expenses will likely increase with a growing family. When your expenses increase, your emergency fund will need to keep pace.
2. With a growing family, you may want to err on the higher side of that range. More people in your family means a higher likelihood of unexpected expenses.

Enrol in provincial/territorial healthcare and adjust your employer benefits

• Enrol your child in health insurance. Enrolment varies by province/territory. Check your provincial/territorial governement's website to understand whether you can enrol online or if the hospital staff or a registered midwife will provide you with the enrolment form. Update the number of dependents information with your employer as well.
• Obtain a Social Insurance Number for your child as soon as possible. Many hospitals provide new parents with the form after birth.
• Consider adjusting your group life insurance coverage. A life event, such as gaining a child, typically allows you to increase your group life insurance through your employer. Your employer may also allow you to insure your spouse/partner and child.

Plan for your future

• Determine whether you should update your Personal Tax Credits Return (TD1 form). You may want to update your TD1 to add dependents, which can impact your take-home pay. You may want to consult with a tax professional.
• Determine whether you qualify for tax credits/deductions. Work with your tax professional to determine whether you qualify for any credits or deductions related to your growing family. Ask about the Canada Child Benefit, the federal child tax credit and adoption-related credits (if you adopted).
• Revisit your financial goals. There’s nothing quite like having a child to change your priorities. A financial advisor can work with you to revisit your financial goals to make sure your spending and saving are aligned with your family’s values. And if you have a partner, open and frequent communication is key to staying on the same page, so you’re working together toward your goals.
• Start thinking about education costs. Post-secondary may seem far away, but time is your friend when it comes to saving. Your financial advisor can help estimate costs, explore your options for education savings including RESPs, TFSAs, personal savings, etc. and determine the best way to balance education savings with your other priorities, including saving for your own retirement.