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Raising children is definitely a joy — it’s also expensive.
And, while parents are great at keeping track of schedules, appointments and making lists that keep their lives in order, financial planning can be forgotten in the rush and hustle of everyday life.
But it’s important to have a financial plan in place if parents are to successfully navigate the different stages of their children’s lives – so here is a quick reference financial checklist for families.
- Research all available employee and government parental benefits so you’ll know what your income is likely to be while you’re away from work.
- Review your current financial plan(s) and determine what you want to save in advance of having a child and what your family budget will be when your new addition arrives.
- Save early and often, in a tax-efficient way. Use RRSPs and TFSAs to build a nest egg.
- Investigate life, disability and critical illness insurance.
- Arrange for a last will and testament or update your most recent will to be sure it includes your wishes for your child’s (and any future children) education, care and inheritance. Name a guardian for minor children in the event of your death.
Infant and Toddler (0-5)
- Register your child for all government benefits.
- Open an RESP. The government offers a Canadian Education Savings Grant, which can provide 20 per cent or more return on the money you save depending on your income.
The early years (5-10)
- Open a savings account for your child.
- Save the receipts from daycare and extra-curricular programs because they may be eligible for the child care expense deduction.
- Re-visit your financial plan and anticipated future costs to be sure you’re saving and investing enough to meet your goals.
Adolescent and Teenager (11-19)
- Talk to your kids about earning, saving and spending wisely.
- If they have a part-time job, help them to divide their income into areas like current cost of living, future school savings and investments.
- Teach them about loans and good and bad forms of debt.
- Set goals with them and add incentives like matching their savings.
Young adult (20-25)
- Offer to contribute toward the purchase of their first home if they are able to save a certain amount on their own.
- Talk with them about savings plans like TFSAs and RRSPs.
- Be sure they understand all the tax deductions and credits available to them through RRSP contributions, their educational expenses, and so on.
- Encourage them to work with a professional to file proper tax returns.
- Include them in conversations about estate planning and where to find your will and other valuable information.
- Life can bring joy and happiness along with change and challenges. Your professional advisor can help navigate every stage by providing the personal financial knowledge you need and the right financial plan for your family.
Jeff Somers, BA, RRC, CFP works at Investors Group in Charlottetown. This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc. presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances.