When you are expecting a child, you are probably focused on some of the more exciting points: decorating a nursery, picking out baby clothes and baby names. While that is no doubt a major part in the anticipation of growing your family, you’ve got to allocate some time to thinking about the shift in your finances.
A good way to approach this is in much the same way that you do when you are planning on items you’ll need to take care of your baby. Make yourself a financial checklist too.
“While welcoming a baby is a major milestone to celebrate within your family, the addition of a new family member also marks a major financial shift. You may be looking at a reduction in income, coupled with a host of new expenses, like extra food, clothing and care costs. Your savings requirements are going to increase as well for the longer term,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“In order to avoid needing to turn to debt to cover expenses, and accumulating costly interest expense, you’ve got to engage in some pre-baby financial planning,” says Schwartz.
Here are some items to include on your checklist:
Do you have a budget?
If you’ve been winging it financially, now is the time to set out your budget in detail. Start by setting a budget with your current expenses and income. How does your financial picture look? Now adjust your budget to include potential increases in some areas (food and clothing) and potential decreases in income (parental benefits, reduction of income during leave, etc.)
Track your spending for a few months to see if your budget makes sense. Are you overspending in some categories? Now is the time to tweak- before baby arrives.
Plan child care now
You may be feeling like you are getting way ahead of yourself by seeking out and securing your child care long before baby arrives, but planning ahead will not only give you more choice in your childcare options, it will help you budget accurately for that cost when the time comes.
Up the savings with new goals
You may have been accumulating savings for a rainy day or for a purchase like a house, but now is the time to ramp up the savings. Part of that is to identify new goals in terms of your savings.
Your need for savings is even greater now, because you have another person to look after. You’ll need to consider new savings goals- like retirement and educational savings. It’s essential too that you’ve got a good chunk of emergency savings on hand, to avoid the need for substantial interest charges.
Reduce your debt
You may have casually been trying to pay down your debt, but in the months before your baby arrives, take steps to reduce your debt. The less you owe the more cash flow you’ll have when baby comes. You’ll appreciate having a few extra dollars here and there to pick up late-night diapers or order in pizza because you’re too tired to make supper.
Is your family growing and you’d like to take steps to reduce your debt load before you take on new expenses? The months before baby comes is the time to do it. We can help you get started. Call one of our trained credit counsellors at or visit our free online debt analysis.