Having a baby keeps a mother awake at night, even when their sweet little one is soundly asleep. In addition to the many concerns already related to having a baby (runny nose, colic, motor skill development) come numerous financial worries: on the one hand, raising a child is expensive - between $3,000 and $4,500 a year in Canada, according to the Fraser Institute - and, on the other, it is often the mothers who are left paying the price.
All you need is love and fresh milk. Perhaps, but babies also need clean diapers, clothing, healthy food, and much more for a total of a few thousand dollars a year.
“It can cost anywhere between $3,000 and $10,000 a year, depending on the life choices one makes. Buying new furniture for the nursery rather than purchasing it second-hand, designer clothing, etc.,” says Éric Paquette, personal banker at the National Bank.
It’s all a matter of life choices, a series of daily decisions. Paquette has noticed that mothers will generally spend much more on children’s clothes and school supplies. “It is often cheaper when it’s the dad who makes these purchases! But this is rarely the case. It’s certainly not me in our household!” exclaims the father of nine. Yes, nine.
Having a child is usually also accompanied by other important life changes, such as buying a first home or a bigger car. “It’s the type of venture that will disrupt your family’s financial goals,” says Paquette.
Maternity leave is rich in precious moments, but only in precious moments. Upon their return to work, not only are mothers not benefiting from the increase that they could have received had they continued to work, but they will also generally see a drop in their income; a choice that is theirs.
After her first maternity leave, Marie-Hélène went from working five days a week to only four. “I took Wednesdays off. I had a smaller salary, but the quality of our family life was worth the cost. I took care of the house, the groceries and all appointments on Wednesdays, so we had the whole weekend to be together, free of interruptions,” shares the mother.
Many women make these decisions for the sake of their families: mothers who will extend their parental leave at their own expense, mothers who will choose to stay at home, mothers who will change jobs to make sure that they don’t ever have to get home late, mothers who will prefer flexible conditions over higher salaries, mothers who will turn down promotions to lighten their work loads…
All these decisions usually mean lower incomes for mothers, important losses at pivotal times in their careers. Women today become mothers when they are, on average, 28.5 years old, an age when a professional career is in its infancy and, given the means, could flourish very quickly.
Mothers earn less, spend more, and then feel guilty about it. Enough! Paquette shares some tips on balancing personal finances when you’re a mom.
Review your budget every time your personal situation changes. Set a budget for maternity leave, for returning to work, for putting your second child in daycare, etc. “The point is to always have a balanced budget. Your situation has changed? Then you must also change your consumption habits and keep your expenditure allocation in check.”
Mom spends here, dad spends there. Each validates their individual spending in their own way. Ultimately, there is no way of knowing how much is really being spent on your children. “Why not open a joint bank account where both the mother and the father contribute an equal percentage of their income, and only take out funds for family purchases?”
“Savings are the first thing to be cut when budgets need to be tightened due to the arrival of a child,” says Paquette. Saving only “what remains” does not work, because there is not much left at the end. “Create a systematic savings program that is synchronized with your pay. That can be $50 each pay. This is important, and tax deductions will be just as important, by almost 40%! With the return of spring, it can help to spoil your kids with a new bike, for example.”
It is a way to reduce your mortgage payments, which gives you some leeway for contributing to your savings. You pay a little more interest, but are given the means to save. Enjoy it now that interest rates are at a historical low. “This allows you to contribute to your RRSPs,” says Paquette. “And, you can even use the accompanying tax refund towards your mortgage payments.”
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