Raising a Child in Canada: What It Takes

It's not surprising that having a child increases financial obligations; I spent a significant amount of money in preparation for my daughter's birth.

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In anticipation of my daughter's birth, I prepared myself financially. I spent a lot of money even before she was born to make sure everything was all set. It's not shocking that raising a family in Canada is a costly endeavor. The average cost of raising a child in Canada is estimated to be between $10,000 and $15,000.

While I did indeed spend that much while my daughter was in daycare, I don't seem to be spending quite as much now that she is in school. You should know that there is no magic number of dollars that must be spent on children for you to be considered a good parent. You're doing a great job if you can give them a place to call home that is both secure and loving.

The goal of this article is to provide you with an estimate of the typical expenses a new parent can expect to incur. It's important to remember that the costs you incur will vary depending on the province or territory in which you currently reside. Granted, many of these are written from a parent's perspective. I've also compiled a list of government initiatives that can supplement your income or provide you with outright financial aid simply because you are a parent. Take into account the following when budgeting for a family with children in Canada:

The cost of raising a child in Canada

Insurance for pregnant workers

Canada provides up to 15 weeks of paid maternity leave. This paid time off is available before, during, and after pregnancy. When your maternity leave ends, you have the option of taking either the standard 40-week leave or the extended 69-week leave. Your employer is obligated to keep you on staff during your pregnancy; if they don't provide additional compensation, maternity leave insurance will. If you are unemployed and qualify for employment insurance, you will receive 55% of your average weekly wage up to 3.

Those on extended leave receive no more than a 33% income replacement, up to a maximum of $343 per week. If your annual income is ,300 or more, you will exceed the maximum allowable by law. Unfortunately, the income is taxable, making things even worse. Take note that Canadian mothers and fathers can now take up to 18 months of maternity leave, with payments spread out over that time.

Most married pairs stagger their leaves, but you're free to take them all at once if you prefer. Try telling that to the woman who just gave birth, even if you have better supplemental benefits.

Investment required at launch

Having a child is a major financial undertaking for new parents. The price of raising a child varies greatly from one family to the next, but there are some common costs to consider.

  • Car seat
  • Crib
  • Formula
  • Stroller
  • High chair
  • The Cost of Childcare
  • Diapers

There will be many ongoing costs, even after your children have graduated from diapers and daycare. Supplies, clubs, camps, braces, personal care, uninsured medical care, and more will all need to be covered financially.  

The price tag on raising children can be intimidating, but you don't have to automatically accept it. It's possible to cut back on the price of child rearing by shopping secondhand for many necessities. I can assure you that infants couldn't care less whether their clothing is brand new or gently used.  

Moreover, if you take care of your children's belongings, you can resell them when they're grown up. That will end up saving you money in the long run.

Life cover

When Canadians start a family, life insurance becomes mandatory. Our kids are dependent on us financially, so we need to make sure they are set up with a plan that will provide for them until they can support themselves.

Affordable term life insurance can be purchased for around $30-$40 per month if you are young and healthy. You should try to get enough money to pay off your mortgage, your final expenses, and your child's college tuition. Nowadays, purchasing life insurance is simple thanks to online services like PolicyMe. As before, you'll have access to licensed advisors; however, you won't need to schedule any in-person meetings to go over the policies.

Since I'm in such a gloomy mood, I'll remind you to draft your will. Having a lawyer draft a will is still preferred by many, but lawyers often demand sizable fees. There's nothing inherently wrong with do-it-yourself will kits, but I think Willful is a better option. You can make a valid will in minutes with Willful. You pay once and enjoy free, perpetual updates. Using Willful, writing a will is a breeze, and it won't break the bank. To receive $15 off your Willful purchase, visit my referral link and enter the code MONEYWEHAVE15 at checkout.

RESP stands for "Registered Education Savings Plan" and is

It's not required by law, but I think of RESPs as a necessary expense for any Canadian family. The Canada Education Savings Grant is a yearly award of 0 that is offered at no cost to eligible Canadian residents. The grant will match 20% of the first $2,500 saved annually for a child under the age of 17, up to a maximum of ,200. The contributions themselves are not tax deductible, but the earnings on those contributions are subject to your child's taxation when withdrawn. For the most part, your child won't have a lot of taxable income when they're young, so any gains they make are likely to be tax-free.

The Canada Learning Bond provides a matching contribution of up to $2,000 to families with lower incomes so that they can get a head start on funding their child's RESP. There are zero costs associated with this money, and no additional payments are expected.

Consider using a robo advisor like Justwealth if the thought of opening an RESP and investing fills you with dread. Robo-advisors automate their investment process and charge minimal fees. Making an account is as simple as selecting the year your child will graduate from high school. With that goal in mind, the robo advisor will manage your RESP's investments and cash flow. You can get a bonus when you sign up for Justwealth using my referral link.

The Price of Child Care

The cost of daycare will vary depending on your location. The monthly cost of licensed daycare in major cities can exceed $2,000. When looking for a solution, it may be worthwhile to consider unregulated home care providers due to their lower costs. There are limited slots available, so register your newborn as soon as possible (preferably before birth).

The high price of child care may make it necessary for one parent to stay home with the kids for an extended period of time. Finding and affording child care is discussed at length in a recent issue of MoneySense. Before deciding on a daycare, my wife and I visited probably a dozen different options. It worked out perfectly that the first option we considered was available when we did.

It's worth noting that with the federal $10 per day daycare deal in place, the cost of daycare will decrease significantly over the next few years. We already have lower child care costs in place in some provinces, like Quebec.

Financial Support for Children in Canada

The Canadian Child Benefit provides up to ,639 yearly (3 monthly) to help families with the high cost of raising a child in Canada. For each qualified child under the age of six, the government will pay up to ,602 yearly ($466 monthly) in child care assistance. Each qualifying child aged 6-17 will receive per month. Low-income families were the inspiration for this benefit. Canadian Child Benefit eligibility criteria may mean that families with higher or middle incomes may not be able to receive this government aid. While I can see how it would annoy some people (especially if they still had to pay for things like child care), the system as it stands works fine for me. If you have kids and want to know how much money the government will give you, use this calculator.

In conclusion

Considering how having a child will affect our budget is an important part of deciding whether or not to start a family. Most parents will put all of their financial resources into their kids, but that would be a mistake. It's nice to try to plan ahead by estimating the average annual cost of raising a family, but the truth is that these estimates will always be off.

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