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You are expecting a child

Are you thinking about having a child or will you be a new parent in the coming months? While you'll be joyfully welcoming a new member into the family, you'll also have to reassess your needs and financial plan.

With preparation, you'll be able to meet your bundle of joy with peace of mind and fully enjoy the new adventure. After all, the birth of a child is probably your most enjoyable project!

It's a fact. A new baby leads to extra expenses and requires a reorganized family budget. But to what extent?

How much does it cost to raise a child?

According to the National Council of Welfare, raising a child to the age of 18 costs $180,000, or approximately $10,000 a year1. A study carried out by the Association coopérative d'économie familiale (ACEF) de l'Est de Montréal2 of 11 families with varied incomes revealed that the average cost of the first year of life was $5,194, where the lowest amount was $1,090 and the highest was $13,2903.

The significant difference between the 2 estimates is explained by the fact that the cost of a child varies with the parents' income; the higher the income, the more parents spend on the child4 [Translation]. So, the financial repercussions of a new baby depend on many things, including parental income, lifestyle, values, etc.

Whatever your situation, one thing is certain: you can start preparing ahead of time and spend wisely, instead of over consuming.

1. "Le coût d'un enfant selon les chercheurs", Isabel Thibault,, 1998-2009 (tiré de : Un bébé à bas prix, ACEF de l'Est de Montréal, dern. éd. 2008).

2. Study updated in 2008.

3. "Le coût d'un enfant selon les parents rencontrés par l'ACEF de l'Est", Isabel Thibault,, 1998-2009 (tiré de : Un bébé à bas prix, ACEF de l'Est de Montréal, dern. éd. 2008).

4. "Chéri(e), j'ai réduit le coût des enfants!", Marc Tison, La Presse, August 18, 2008.

Now that you are expecting a child, you have to budget for the estimated costs of your baby's first year, as well as for lower income resulting from parental leave.

For help, use the Your budget worksheet (PDF, 226 KB) - This link will open in a new window., and add in baby costs (PDF, 183 KB) - This link will open in a new window.. To get an accurate picture of your income and expenses, see Budget management tool - My budget.

Never made a budget?

It's not too late! To find out how to assess your financial situation and learn how to make a monthly budget, see Manage your daily finances.

Steps to take when preparing for a baby

  1. Make a list of things you'll need: clothing, accessories (bottles, pacifiers, toys, etc.), stroller, crib, changing table, high chair, car seat, bedding, curtains, etc. Keep in mind that you will surely receive some gifts and that you may be able to ask around and find some gently-used items. If so, make sure that these items meet current security standards.
  2. Determine if the size of your car is still appropriate for your family or if you have to buy a new one.
  3. Start living on a lower income now, as you will earn less during parental leave.
  4. Discuss the options open to you after parental leave ends. Will one of you stop working? If yes, for how long? If not, how much will daycare cost? Keep these factors in mind.
  5. Don't forget to take into account the tax deductions you will be entitled to as a parent. Consult the Parents section on the Revenu Québec website and the Benefits for your family section on the Canada Revenue Agency website. It may not be possible to find out exactly how much you are entitled to, but you'll be able to get an estimate.
  6. After making your new budget, think about what changes you could make to your lifestyle and which expenses you can cut. Remember that a new baby will keep you at home more and that your priorities will change: fewer trips to the movies, fewer new clothes, lower commuting-related expenses, etc.
  7. Set something aside from every paycheque with automatic transfers to a savings account. You'll have an emergency fund for unexpected expenses.

How much will your regular instalment savings be worth?

Baby is here!

After a few months, review your budget and compare your real expenses with your previous estimates. Don't hesitate to make adjustments: can you cut out some expenses like leisure activities or restaurant meals? Cut out everything you don't really need: a second car, cable, cell phone, etc. Essentially, get rid of whatever you can't afford.

If you overestimated your baby costs and are getting along fine, think about contributing to a Registered Education Savings Plan (RESP). To find out more, see Plan for your child's financial future.

Sometimes, a few dollars saved here and there make a big difference. Here are some helpful savings tips:

  • Take advantage of sales. If a must-have is on sale, don't hesitate to buy it, even if you will only need it in a few months' time.
  • Buy used. Babies grow so quickly that it isn't always worth it to buy everything new and then relegate it to the back of the closet. Second-hand shops, bazars and toy libraries often have very affordable items in good condition. Make sure, however, that these items meet current safety standards.
  • Be creative. Take some time before the birth to design an affordable room for your baby, adding your own special touch. For example, make your own stencils to add whimsical elements to the walls or ask some kids in the family to help make a mobile for your baby.
  • Avoid paying for things you can do yourself. Do you know how to sew? Try making some baby clothes or purées for the freezer. The possibilities are endless.
  • Use toy-lending services. If organizations in your area offer this kind of service, you can see if your child likes a toy before going out and buying it!
  • Ask yourself the right questions before buying. Before buying that little pair of $50 overalls or adorable giant teddy bear, ask yourself if you really need it. Who do you want to spoil: yourself or your child? Remember that your baby doesn't need a lot of material things to be happy.

Learn more
Want to learn how to be a better consumer and avoid overbuying? See Responsible consumerism.

Higher education is expensive, particularly tuition, but there are also school supplies, living expenses and more. In 2011-2012, the average cost of a year of university in Quebec was $15,151 for Canadian students outside of Quebec.

Costs will be even higher for a little one who will be starting post-secondary in 10 or 20 years.

Total cost of studies for a 4-year program 6
Child's age in 2013 13 years old 5 years old 1 year old
First year of university 2018 2026 2030
Cost for a student living away from home $75,322 $94,323 $102,765

This table shows projected costs, based on a 4.4% increase per year and a 2.3% increase per year of the Consumer Price Index (CPI) over 10 years (1998 to 2008).

Registered Education Savings Plan (RESP)

An RESP lets you contribute up to $50,000, tax-free, towards your child's education. You can make automatic contributions as often as you choose: weekly, every 2 weeks or monthly. Family and friends can contribute too.

When you contribute to an RESP, you may be eligible for additional financial support

  • The Canada Education Savings Grant (CESG)
  • The Quebec Education Savings Incentive (QESI)
  • The Canada Learning Bond (CLB)

Learn more
See Registered Education Savings Plan (RESP).

Use the Education Savings Calculator - This link will open in a new window. to estimate the cost of postsecondary studies for your child.

A savings account for your child

If you want to put money aside for your child (that's not necessarily for school), you can do so with a regular savings account. Some parents save money with the goal of one day depositing it into their child's savings account.

You can schedule automatic transfers from your chequing account to a savings account. To find out more, see Transfers between accounts.

A Tax-Free Savings Account (TFSA) may be even more suited to your needs. It is a registered savings plan where income and withdrawals are not taxable. You can save up to $5,500 a year as of 2013 ($5,000 from 2009 to 2012) in a TFSA and have access to your money at all times.

Learn more
See Tax-Free Savings Account (TFSA).

Calculate How much will your regular instalment savings be worth?

Did you know?
Planning for your child's financial future means you also have to review your own insurance coverage: will it guarantee you enough income to cover your material needs if you or your spouse becomes disabled or critically ill, or dies? For more information, see Life and health insurance.

6. “Desjardins Registered Education Savings Plan”, Desjardins Funds Investment Solutions.