Financial Planning for New Family in Canada

Preparing to become a parent is an exciting journey, but it also comes with its fair share of challenges. From managing finances to taking on new responsibilities, the changes can feel overwhelming. Without the right preparation, the stress can easily overshadow the joy of parenthood. That’s why it's important to understand and plan for the realities of raising a child, so you can fully enjoy this special time in your life.

Medical costs

Medical costs are among the first things to consider when you plan to bring a child into this world. The public healthcare system in Canada mainly covers medical expenses related to pregnancy and childbirth. However, you will still have to pay out of pocket for certain necessities like prenatal vitamins, maternity clothes, etc. Budgeting for these expenses is necessary for a stress-free child-birthing experience.

Work Arrangements, including Maternity and Paternity leaves

Starting a family requires some sacrifices on the work front. Canada's progressive policies alleviate some of the hits you take on the workplaces with provisions for eligible new parents to be entitled to Employment Insurance (EI) benefits during maternity or paternity leave.

This includes EI maternity benefits for biological mothers, including surrogates, who have access to 15 weeks of EI maternity benefits. The period can start as early as 12 weeks before the expected date of birth and end as late as 17 weeks after the actual date of birth.

Childcare expenses and Saving up for your child's future

The Canadian government provides certain benefits and savings opportunities that cater to parents. These programs can help ease the financial burden and secure your child's future. We cover some of the most popular programs below:

Canada Child Benefit (CCB)

The CCB is a tax-free monthly payment administered by the Canada Revenue Agency to help eligible families with the cost of raising children under the age of 18.

The payments are adjusted based on the number of children, their age and adjusted family net income reported in the previous year's tax return. The maximum amount you can receive through this channel is $7,437 per year for a kid under six years and an adjusted family net income under $34,863.

• To be eligible for this program, an individual must:
• Live with a child below 18 years.
• Be primarily responsible for the care and upbringing of the child.
• Be a resident of Canada for tax purposes and
• Be the spouse or common-law partner of either a:
• Canadian citizen
• Permanent resident
• Protected person or
• Temporary resident who has lived in the country for the previous 18 months

Registered Education Savings Plan (RESP)

A RESP is a special savings account intended to save for a child's education after high school. Any parent or adult can open an RESP account for a child- through a financial institution- also known as the 'promoter.' These savings and benefits can be used to meet future educational expenses of the child, including tuition, transportation and rent.

A beneficiary?with a Registered Education Savings Plan (RESP) may be further eligible for benefits like the Canada Learning Bond (CLB) and the Canada Education Savings Grant (CESG), along with other provincial benefits in the provinces of British Columbia and Québec.

The CLB can provide up to a lifetime maximum of?$2,000?for each eligible child from families with low-income

• No contributions to the RESP are needed to get the CLB
• The beneficiary could receive $500 the first year they're eligible, then another $100 each eligible year after that until the age of 15
• The CLB is retroactive. The beneficiary can still be eligible to receive it up to the Day before they turn 21

The CESG can provide up to a lifetime maximum of?$7,200?to an RESP beneficiary. Its distinguishing characteristics are:

• Contributions must be made to the RESP to get the CESG
• The CESG adds a percentage of the contributions made to an RESP
• The CESG can add a maximum of $500 to an RESP each year and up to another $100 for eligible families with middle- and low-income
• If you do not receive the maximum CESG amount in a given year, you can still receive it in future years. You can catch up on this amount by making more contributions to the RESP.
• The CESG is available until the end of the calendar year when the beneficiary turns 17

Conclusion

Starting a family is a momentous undertaking for any couple. While it entails many sacrifices and changes to lifestyle and budget, it is almost always worth it. Exploring the aid and financial help available all around you can help you overcome hardships and make for an enjoyable experience if you choose to grow your family.