Having a child is a beautiful feeling, but it’s equally expensive. If you have just been blessed with a new baby or expecting one, there’s always a lot to learn for newbie parents regarding savings. Surely, everything will seem life-changing initially, but the key is to plan your finances wisely. If you are confused about your future finances, we have got you covered with these helpful tips in our guide.
If you are looking for affordable insurance for your children, check this article for more information.
Tips to save for your new baby
Here we have some tips for you to save for your newborn:
Add your child to the existing health insurance
As individuals, you might already have health insurance which generally allows adding your newborn till they reach a certain age limit. However, the qualifying age of your child varies from one insurance company to another – some allow it within 30 days of birth, while some extend it up to 60 days to 90 days. If you aren’t sure about your child’s coverage, talk to your agent and sort everything out.
Buy term life insurance
As a parent, you would always prefer to stay around them for many years, but you hardly know what destiny holds ahead. As life can’t be predicted, it’s better to stay prepared. Especially if you are a major earning member of the family and your child is financially dependent on you, there can’t be a better option than term life insurance.
Unlike other insurance covers, your family will receive a lump sum in return if unforeseen circumstances like the insurer’s death. The best part about such covers is that the earlier you start, the lesser premiums you pay. However, some health check-ups and Income Tax Return details are required to ensure you’re healthy and earn enough to pay premiums on time.
Open their savings account
The earlier you introduce your child to the habit of saving up, the better. As parents, you can invest for them from as early as 14 days of their birth. The best part about these types of saving accounts is that they will earn an annual tax-free dividend which will grow tax-free for life.
Once they are 18 years old, open a TFSA (Tax-Free Savings Account) for them and transfer the amount from their child plan absolutely free of tax.
Figure out a higher household budget
According to the recent surveys done in America, most families spend somewhere between $10,000 to $34,000 when a new child is born. From diapers to toys and baby foods – these are anything but cheaper.
In addition, there can be other expenses like medical, upfront costs, and upcoming education. These are recurring costs and might eventually take a hit on your wallet, so considering a higher household budget seems to be a fairer option.
Build an emergency fund
Having a job can hardly be referred to as a stable income these days, considering the growing unemployment rate. While you can’t really depend on it, you can save up and build an emergency fund.
If you lose your income source, your family can dip into the emergency fund to meet the necessary expenses. In other scenarios, the money from the emergency fund can also be used for your child’s higher education in the future.
Save for your child’s higher education
When your child is in school, the expenses are bearable, but it will be a costly affair once they step into college. You surely don’t want your child to be drowning in student loan and credit card debt by the time they graduate. As a result, begin planning and saving for their higher education as soon as they are born.
You can avail of a Registered Education Savings Plan (RESP) for your children to ensure acknowledged post-secondary education in the future. You can contribute upto $50000 over 31 years. The account can stay operational for 35 years.
You also benefit from the Canada Education Savings Grant (CESG), a grant from the Canadian government for your child’s higher education. The CSEG is capped at $7200 per beneficiary upto 18 years. While the maximum annual contribution can be $500.
Some other forms of saving
While the above list covers some financial saving methods you can adopt, there are quite a few domestic savings you could resort to as well:
Save on diapers
Canadians usually shell out anywhere between $50-70 each month for diapers. Although it may sound insignificant to some, you’ll certainly be shelling out quite some money over the years on diapers. Thus, you need to look for opportunities to save on diapers.
To begin with, get your hands on bulk diapers when there’s a sale and preferably not at full price. You can also try out cloth diapers because they come really cheap, and most of the time, you can DIY it yourself at home.
Avoid fancy clothes
There’s no point investing your hard-earned money in fancy clothes for your baby. As newborns grow up really fast, they would hardly fit into the clothes you buy now after four to five months. So, what’s the point of buying them? Instead, put the money aside every month as a token of savings and purchase comfortable clothes they can wear frequently.
Try to breastfeed more
Most mothers nowadays have shifted to formula feeding from breastfeeding. While it’s a convenient option, it can be pretty costly. If you are healthy enough and breastfeeding isn’t difficult, don’t skip it. Besides saving some good bucks, you’ll also have some health advantages.
Don’t invest in shoes
Your newborn will probably not be on their feet outside till they are at least a year old. Even when they are outside, they will either be in their prams or your baby carrier. So, there’s no reason you should be splurging on their shoes. Instead, get them some comfy socks, and they are good to go!
Endnote
Having a baby is undoubtedly fun, but chipping off impulse expenses for them can bring down the excitement. However, remember the reason behind it – to give your child a better future with financial freedom. Make a start today; the rest will eventually fall in place.
