If you’re expecting a baby, your life is about to change dramatically. As you prepare for the new bundle of joy, you might be thinking about all the expenses coming up, such as cribs, strollers and baby car seats – which is good because having a baby is expensive. Baby’s first year can cost on average about $10,000 a year, not counting child-care expenses. But you should also look at your long-term financial preparedness and get ready to make changes to your family’s investment, retirement and estate plans.
And baby makes … investment planning a priority
For starters, you’ll need to determine a budget that anticipates and controls cash flow and monthly expenses. You want to start setting aside money to carry you through what will be a joyful yet tumultuous time, and beyond.
Maybe one of you is going to take maternity or parental leave – or both. A Servus wealth advisor can help you with the ins and outs of government and company programs. They can also advise you on savings vehicles such as Tax Fee Savings Accounts (TSFAs) and lay out your options for investing in a way that gets you through the early years without forgetting about the long road ahead.
Your child’s post-secondary school education is something you want to think about early as this milestone will come quicker than you might expect, and tuition alone can cost on average around $7,000 per year. Consider investing early in a Registered Education Savings Plan (RESP), since the sooner you start saving, the more opportunity there is for your money to grow. The good news is that the Government of Canada offers free money when it comes to saving for your child’s education. The Canadian Education Savings Grant (CESG) will give you up to 20 percent of your yearly $2,500 maximum RESP contribution.
Lay the foundation early for your retirement
Having a child is not cheap – most estimates peg the cost at about $250,000 over 18 years – and you want to be able to raise your child without sacrificing your retirement fund. An advisor can show you options that are best suited to you and your family, taking into account your plans for retirement and your income. As with RESPs, the earlier you start contributing to retirement plans through your employer or Registered Retirement Savings Plans (RRSPs), the more you can earn in interest over the years. So, while retirement might feel a long way off, planning for it is not something you want to put off.
Your advisor can help you with juggling your large life goals, including possibly planning to buy your first home or dealing with debt, so that you can allocate your money in a way that helps you meet all those goals.
Estate planning protects your family
When you’re just trying to figure out where to place the bassinet or how to get baby to sleep through the night, estate planning feels like the last thing on your list of priorities. But even though you might be young, what if something unforeseen happens to yourself or your partner?
Life insurance is one of the best ways to protect your family. Even if you already have some life insurance, perhaps through work, you’ll want to revisit your policy now that your family has grown. Depending on what kind of life insurance you decide on, you can even use the policy to help finance your child’s education down the road.
Having a will is another important part of estate planning and should also be updated to name beneficiaries and lay out guardianship for your child should something happen to you. A Servus estate planning expert can help you and refer you to a lawyer if needed.
Having a baby is one of life’s greatest joys, but with it comes a lot of responsibility and financial planning. When it comes to investment, retirement and estate planning, you don’t have to go it alone. Servus can help you take these big steps so you’re able to meet all your long-term goals while protecting your family’s financial future.
Servus Wealth Strategies Ltd. is a subsidiary of Servus Credit Union Ltd. offering financial planning, life insurance and investments.