How much does it cost to raise kids in Canada?

Having children is a big financial responsibility -- and it's important to know what you're getting into. Read this guide for an outline of some of the biggest costs.

By Krystal Yee

According to MoneySense.ca, the average cost of raising a child to age 18 is a whopping $243,660. Break down that number, and that’s $12,825 per child, per year -- or $1,070 per month. And that's before you send them off to university.

While money isn’t the only factor when deciding when to have children, it’s still important to consider whether you can afford to raise a child -- and what short-term and long-term sacrifices you might have to make.

Here are some numbers to think about.

Maternity leave
Employment Insurance will only give you a maximum of $485 per week, or $45,900 a year -- and you have to pay income tax out of that amount -- so it’s important to think about how your household will deal with the loss in income during the first year of your baby’s life. In order to become comfortable with your reduced household income, calculate how much money you might receive in maternity leave benefits and try creating and living off of a reduced budget while or even before you are pregnant.

Lost wages
Not only will you lose a significant amount of income during maternity leave, but taking time off to raise children might also affect a parent’s long-term employability. MoneySense.ca suggests that for each year parents take off, they experience a three per cent wage loss. So if you return to the workforce after taking five years off, you are likely to earn 15 per cent less.

Mandatory expenses
Parents of babies need items such as a crib, car seat, stroller, high chair and baby gates. These items aren’t cheap, and can potentially cost thousands of dollars in total if you decide to buy new. Start your search for these items by asking friends, family, coworkers or neighbours who have recently had children. They might be willing to sell, lend or even give you the items that you are looking for. Make sure to check out Craigslist, Kijiji and neighbourhood yard sales for deep discounts on these expensive items.

Ongoing expenses
Children can be money pits. Not only do newborns go through a huge amount of diapers, formula and clothing, but the costs to feed and clothe your child will increase as they continue to grow. In fact, according to the MoneySense.ca cost breakdown, you could be looking at spending $48,760 just to put food in their mouths and clothing on their backs. Cut costs by breastfeeding if you can instead of buying formula, using cloth diapers and looking for hand-me-down clothing, toys and other miscellaneous items.

Child care
If both parents work full-time, the cost of day care will most likely be the biggest expense in raising a child, with costs ranging anywhere from $700 to $1,100 per month, per child, depending on your province and city. It can pay to do your research and get on waiting lists as early as possible. Note that day care is a tax-deductible expense, and the spouse with the lower income can claim up to $7,000 per year. So make sure to keep receipts for all child care-related expenses, such as nursery schools, nannies and day camps.

Shelter
MoneySense.ca calculated that the cost of shelter for one child, including furnishings and household operations, comes to $2,720 per year, or approximately $226.67 per month. Add up the expenses until age 18, and it will end up costing you $51,680 to put a roof over your child’s head.

Aside from the MoneySense.ca report, expecting parents can estimate how much a baby could set them back by using the detailed cost calculator at BabyCenter.com [http://www.babycenter.com/baby-cost-calculator]. It’s important to note that the information will be in U.S. dollars and geared toward American parents, but it still gives a good indication of what to expect before your little bundle of joy enters the world.

There’s no question that having kids comes with a hefty price tag, but most parents wouldn’t trade the experience of raising their children for anything in the world. Starting to save as soon as you can, collecting cost-cutting advice from other parents and planning far in advance of your due date will mean less financial stress for you once the baby comes -- and more quality time to spend with the newest addition to your family.

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