How to prepare for a new baby - MoneySense

How to prepare for a new baby

Just found out you’re having a baby? Get ready for some financial upheaval. Here’s what you need to know


Living on less

First off, figure out how much income you’ll have while you’re on parental leave. Employment Insurance will give you a maximum of $468 per week. Ask your employer if they will top this up. Then subtract the additional costs of raising a child—MoneySense research shows that a new baby costs about $16,500 a year. Financial planner Roel Sarmago advises reducing your spending before the baby is born. “That gets you used to the extra expense.”

Take advantage of free money

The Universal Child Care Benefit pays out $100 a month for each child under six. Depending on your family’s income, you may also be eligible for the Canada Child Tax Benefit. The amount depends on how many children you have, the province you live in and your household income. You can get an estimate of your benefits by using the Child Tax Benefit calculator on the Canada Revenue Agency website (

Protect your family

You don’t need to contribute to your child’s RESP right away, but get yourself some life insurance immeditately. “Buy term life,” suggests financial planner David Stewart. Breadwinners with dependents need to make sure they have enough life and disability insurance to support the family should the worst happen. A good rule of thumb is to get life insurance coverage for 10 times your income.

The cost of child care

If you want a spot in a provincially regulated daycare facility, sign up early: there is often a wait of several years. According to Today’s Parent magazine, this type of care will set you back $25 to $75 a day. If you hire a nanny, the process can take two to six months. It will cost around $300 a week if you provide room and board, and up to $600 a week otherwise.

Gently used gear

Your baby won’t be choosy about having the latest trendy clothes—yet. Find a friend or family with a child a year or so older than yours and arrange a constant stream of hand-me-downs. Set up a gift registry for your baby shower and pick up any missing items at garage sales and second-hand stores. But always buy cribs and car seats new so they meet current safety standards.