Just about every year, some newspaper, blogger or pundit gets free PR claiming to know the cost of raising a child in Canada. Some quick Googling suggests it’s well above $1,000 per month, and somewhere in the neighbourhood of $250,000 over 18 years. But there are major problems with trying to come up with a one-size-fits-all number.
First of all, the cost of living can vary a lot depending on where you live. For example, infant care that costs $7,812 per year in Winnipeg will set you back $21,096 per year in Toronto. Adding an extra bedroom to your home will also cost a lot more in Vancouver than in Saint John.
Another issue is that the cost of raising a child will not be spread out evenly over time. For example, you won’t need to spend money on diapers or daycare forever, but before you know it, it’s time to think seriously about saving for college or university. In other words, there are different types of costs at the many different life stages.
Then there’s the question of your overall household income and lifestyle choices. Are you the type of family to keep things simple? Or are you looking forward to lots of sports, activities, lessons, and trips to Disney World?
OK, this is going to take a bit of work
To get a realistic idea of what you will have to spend, here are the major categories to think about, and some tips on how to find a number that is realistic for you.
If you think you’re going to need more space, hop onto realtor.ca and take a look around. If you need help figuring out what you can afford, try this calculator or send a note to Ryan Baynham, the friendly mortgage expert over here at Planswell.
My mom always said I must have a hollow leg. Most kids will eat less than a grown adult, but feeding them is still pricey, especially with the convenience foods that most parents will find come in real handy. Plan on spending the same amount per month for your child as you do for yourself.
As I mentioned, this varies a lot by region. Ask friends in your area what they’re paying. You can also check out this article from the CBC with lots of examples.
This one’s a wildcard. You need to think about the things you plan on doing, and how a child will change the cost. Infants generally fly for free, and kids 2-12 fly with a reduced fare. Hotels generally won’t charge for a youngster. Tickets to Disney World are shockingly expensive.
This is another subjective one. Clothes don’t last long when a child is getting bigger every year. Scanning the various opinions out there (and chatting with our CEO, who is a father of four), it seems like you could take advantage of sales and hand-me-downs to get by on a few hundred dollars per year, or you could spend an almost unlimited amount. You decide.
The best way to save for a child’s education is with a Registered Education Savings Plan (RESP). You invest your money in this type of account and the government matches 20% of your contributions up to $7,200 per child. It’s a great deal. You can even get grandparents and other relatives to chip in. Just build a free financial plan to see what an RESP can do for you.
You’ll be spending a bit more on everything from toothbrushes to bed linens to movie tickets to gas and hydro. Try to notice what you’re spending on these things and add perhaps 20-30%. These baby experts say diapers will cost you $72 per month. As your child ages, bigger-ticket expenses come into play, such as iPhones, trendier clothing and maybe even a first car. You can also use our monthly budget calculator to keep tabs on how much you’re actually spending.
The expenses can quickly add up, but support is available from the government. Maternity leave benefits can replace up to 55% of your income for 35 weeks. Depending on your income, the Canada Child Benefit can provide assistance of up to $6,496 per year.
If you qualify for an annual HST/GST credit, the amount you receive may be higher with children. There’s financial support for children with disabilities, and the RESP program mentioned above to help with college or university. It’s also worth looking into the provincial and territorial programs where you live.
Oversimplified answers about the cost of raising a child are not much use. In the future, the engineers at Planswell may attempt to build a calculator that can capture all of these variables and give you a more customized answer. For now, you need to do a bit of thinking and don’t hesitate to ask friends in your area what they have experienced.
One thing you can do right now is build a plan to sustain your lifestyle throughout parenthood and into retirement. It’s all about reducing the cost of your borrowing, taking advantage of great investment opportunities, and protecting your family with the right insurance. We’ll give you the answer for free in only three minutes!