Having a baby is a very exciting experience but what some may not realize is how much money is needed to raise a child each year. On average, a Canadian spends approx. $10,000-$15,000 each year raising a child. From diapers to clothing, activities, braces and post-secondary education, the costs start to add up year after year. And that's just for one child. If you have twins or multiple kids, that amount may double, triple or more!
When planning on having a child, money should be a factor you consider. Understanding your finances and how much you'll need to raise a child can help you determine if the time is right now, or maybe not for a few more years.
To show how the costs of raising a child can add up, we've broken down a few child-related expenses to consider.
One-Time Costs in the First Year:
A car seat, stroller, crib, change table and baby monitor are just a few of the items you'll need to purchase when having a baby. All big-ticket items with larger price tags. It's recommended you start putting money aside during your planning stage to cover these expenses when it comes time to purchase. Also, consider adding these items to your baby shower registry and asking family and friends to contribute to the larger items to offset costs. Purchasing second hand is also a great option for reducing costs; however, if you do this remember to look at expiration dates.
Food, Diapers & Clothing:
Baby necessities such as diapers, food and clothing can have a large impact on your monthly budget. On average, a baby uses more than 2,700 diapers in its first year. With diapers costing an average of $0.20-0.25 each you’re looking at roughly $550 a year in just diapers - that’s not including baby wipes, diaper rash cream, etc.
Additional costs can also include formula and baby food depending on your approach to feeding your baby. Whether choosing to breastfeed or not, formula feeding should be considered when factoring money as sometimes, even if planning on breastfeeding, unexpected factors may not allow for you to do so. As well, as your child grows, they’ll begin eating the same foods as you and though you may not be buying baby food anymore your weekly grocery budget will increase.
Depending on your child's age, you may pay anywhere from $250-$1,200 a month for childcare. Typically, the younger the child is means the more you'll pay for childcare. Something to be aware of is that many childcare providers only take a few infants and young children at a time and it's recommended you begin looking and putting your name on a waiting list as soon as you can to secure a spot for when you return to work.
Though university may be 18 years away, it’s never too early to start saving for your child’s post-secondary education. Registered Education Savings Plans (RESPs) are taxed-deferred savings accounts and allow you to contribute as much money as you like up to a lifetime maximum of $50,000. To help your money grown faster, the federal government also contributes a percentage of money to the RESP each year based on your contributions. Check out the 'What to know when it comes to RESPs' blog to learn more.
Costs related to raising a child may vary per family due to each unique family situation. To understand how much raising a child may cost you, we recommend completing Money Sense's Costs of Raising a Child Calculator.
Whether you're thinking about having a child now or in the future, it's important you understand the costs related to raising a child and create a financial plan. Talk to a financial advisor today to get your plan started.