Starting a Family? Remember These Financial Considerations

Preparing to start a family is exciting, but it also requires careful financial planning. With the right approach, you can enjoy this special stage of life while maintaining financial security. 

Start with the Basics 

When planning your family finances, begin by creating a comprehensive budget. Having a clear understanding of your current and future financial circumstances will help you make informed decisions. 

Below are some key steps toward building your budget. 

• Assess your current expenses. Be clear on what your ongoing and necessary expenses look like (i.e., housing, groceries, transportation, and bills). Next, assess how much you’re spending on non-essential expenses and identify areas where you can cut costs.  
• Account for child-related costs. Consider upfront costs such as furniture and supplies as well as ongoing expenses like childcare, clothing, and food. 
• Build an emergency fund. Aim to set aside enough money to cover unforeseen expenses that could disrupt your family’s ability to pay for day-to-day life comfortably. A reserve of three to six months worth of expenses is a great starting point. 

Consider Parental Leave and Income Adjustments 

Parental leave can change your household income, which makes planning even more essential. If your income will be reduced during leave, consider creating a temporary spending plan that includes postponing non-urgent costs. You may also want to consider opportunities to supplement your household income if you have the support of a partner.  

Of course, you should also ensure you understand what you’re entitled to. Researching government programs like EI maternity, paternal benefits, and employer-provided parental leave policies can help.  

Another big financial adjustment to consider is childcare costs. Planning for these expenses well in advance of your transition back to work will help offset the financial burden. 

Planning for Non-Traditional Families and Fertility Issues  

Family planning for 2SLGBTQ+ individuals, or families seeking alternatives to natural conception, often come with additional considerations. Below are some important things to research.  

• Family-building costs — Building a family through adoption, surrogacy, or fertility treatments can be expensive. For instance, surrogacy costs in Canada can range from $60,000 to $100,000, which includes legal fees, medical and surrogate expenses, and IVF cycle costs. Adoption costs can also vary widely, depending on whether you pursue private, public, or international adoption.  
• Financial assistance programs — Depending on your province or territory, you may be eligible for financial support to help reduce the financial burden of fertility treatments and surrogacy. Explore programs specific to your area and the steps required to ensure you get the support you need.  
• Legal protections — Work with a legal professional to establish parentage rights, custody arrangements, wills, and powers of attorney. For example, legal parenting agreements can ensure clarity and security for all family members, especially in the event of a relationship breakdown.  
• Budget for additional support — Protect yourself and the ones you love by including legal and professional advice in your financial plan. Costs for family lawyers, estate lawyers, and professional financial planners can vary widely. Do your due diligence ahead of time and research the costs associated with the support you require.  

Think Long Term  

It’s important to think through the long-term implications of taking your next step. Your child is financially dependent upon you and your partner, if you have one. To start with, ensure that you each have adequate life, disability, and critical illness insurance. These types of insurance policies safeguard the family from a loss of income due to death, serious medical diagnosis, or inability to work due to an illness or injury.  

You’ll likely also want to get a head start on saving for postsecondary expenses. Explore options such as the Registered Education Savings Plan (RESP) and the Canadian Education Savings Grant (CESG) to help you save for your children’s future education costs.  

Try not to lose sight of your retirement goals while balancing your new financial responsibilities, but don’t be too hard on yourself. Allow yourself some grace if you can’t afford to continue retirement contributions while on parental leave. Just ensure you have a plan to make this a priority when you and/or your partner return to work. 

Consult a Professional 

Starting a family involves many financial considerations. But with the right financial planning approach, it can be a joyful and manageable transition. Working with a CFP^® professional or QAFP^® professional can help you navigate your unique financial needs and develop a plan tailored to your future family. 

To find a CFP professional or QAFP professional near you, use the Find Your Planner tool. 

Cindy Marques, CFP, is the Director of Financial Planning at Open Access Ltd. in Toronto.