The baby’s finally here! The nursery is ready, the house is clean and the freezer is stocked with food. As a new parent, your needs have changed, and your financial planning should reflect that.
For Quebec only.
“Whenever your life changes in a major way, so does your financial situation,” says Angela Iermieri, a financial planner at Desjardins. You need to know how much money will be coming in (like maternity/parental benefits) and take new expenses into account.
Adjusting your budget for the new baby is essential, but so is planning for longer-term needs, like buying a home, and your child’s future needs. The goal, of course, is making sure there’s more money coming in than going out, so you can build savings.
“Now is a good time to look at your ability to save and build an emergency fund, which you’ll need if you want to maintain your standard of living should life take an unexpected turn,” says Iermieri. An emergency fund gives you peace of mind in case something unexpected happens and reduces the financial stress that comes with being a parent and taking on new responsibilities.
A great way to save is to set up automatic savings, which allows you to build up an emergency fund without hardly even noticing.
While you’re at it, why not set up a registered education savings plan (RESP) for your child.
Not only is it a great investment in their future, it’s also an excellent investment vehicle, since the government matches your contribution by 30% in Quebec (and 20% in Ontario) on annual contributions, up to $2,500. This flexible plan allows you to contribute based on your ability and to increase your contribution as your budget allows.
“Having a baby should remind parents of the importance of creating a will and power of attorney,” says Nathalie Tremblay, a life and health insurance specialist at Desjardins. “They should also review their individual insurance coverages.”
If you have group insurance through your employer, you should check to see if those coverages meet your new needs.
“You want to minimize the financial impact of death. With adequate life insurance, your loved ones would be able to pay your final expenses, like funeral expenses and taxes, and maintain their standard of living,” says Tremblay. That might mean they wouldn’t have to move, your kids could continue their extracurricular activities and they could go to college or university, just as they would if you were still there. And with disability insurance, your income would be protected if you weren’t able to work because of an illness or accident.
Get professional advice
There are lots of tools available to protect your family’s quality of life. That’s why evaluating your individual insurance coverages is part of an overall needs analysis.
We have tools and information you can look up on your own; for an accurate and thorough analysis of your financial needs, get in touch with a Desjardins Life Insurance representative.
Having a baby is an exciting event, one that will change the rest of your life. Your child will depend on you for many years to come, so make sure your finances are in order.