What to financially expect when you’re expecting.

Welcoming a newborn into your family may be one of life's greatest joys, but like everything in life, it comes at a cost and a considerable one, to say the least. New parents find themselves scrambling to answer questions such as “When should I start saving for my child's education” and “if something happens to me, will my child be ok”? These are all fundamental questions that should not go unanswered. Here are a few financial considerations that should be taken into account when you're expecting.

Education Planning

A quality education is one of the greatest gifts you could give your child.  In a perfect world, this would come at little to no cost. The reality is that the financial obligations that come with attending a post-secondary institution can lighten even the heaviest of pockets. The current average price of undergraduate tuition fees in Canada is $7,437^[1] per year. With these costs in mind, education planning is a vital component of your overall financial plan.

There are several ways you can start a dedicated education savings fund for your children. A Registered Education Savings Plan (RESP) is a great starting point. They offer tax benefits and allow you to take advantage of government grants. The basic Canada Education Savings Grant (CESG)  will increase your annual contribution by 20%t up to $500 annually per beneficiary. It should be noted that there is a lifetime limit on this grant and it is capped at $7,200 per beneficiary, as well as a contribution limit of for each beneficiary of $50,000. Any amount that exceeds may be taxable.

Because every situation is unique It is advisable to speak with a financial advisor who will guide you in the right direction, and help you create a personalized strategy to ensure that your children get the education that they deserve.

Having a Will

While every Canadian adult should have a will in place, adding children into the equation makes having one essential. A poll conducted by the Angus Reid Institute in 2018 found that only one-third of Canadians have an up-to-date will in place, while over half (51%) have no will put in place at all[2]. A will protects your assets and creates a comprehensive plan that secures the future of your child if the unthinkable happens.

The most compelling reason for parents to have a will in place is it gives them the ability to appoint a guardian, this is especially important for single parents. A guardian is an individual that is given legal responsibility over the care of a child in the event that both of the parents pass away before they become legal adults. Often they are responsible for both the care of the child as well as their personal financial affairs. A will also allows you to appoint your children as beneficiaries of your assets and other property, as well as stipulates the age you want your children to receive those assets. Without a will in place, you are leaving your last wishes in the hands of the provincial courts.

The last word

Becoming a parent is the most life-changing event many will experience, as well as the most expensive, and like anything in life, preparation is key. Taking the appropriate steps before you and your partner meet your little one, just might save you from one of many soon-to-be sleepless nights.  

- Mitchell Cathcart, Marketing Associate, Kondwelani Kalinda, Licensed Assistant & Financial Planning Associate and Grant White, Portfolio Manager  at Endeavour Wealth Management with iAPrivate Wealth, an award-winning office as recognized by the Carson Group. Together, Endeavour Wealth Management provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Mitchell Cathcart, Marketing associate, Kondwelani Kalinda, Licensed Assistant& Financial Planning Associate and Grant White, Portfolio Manager for iA Private Wealth and does not necessarily reflect the opinion of iA PrivateWealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.

^[1] https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3710000401

[2] https://angusreid.org/will-and-testament/

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