Nowadays, we speak of a big family when a couple has three or more children. If this is your case now or if it is one of your cherished dreams, you must already know that such a situation poses many challenges, including from a financial standpoint.
But rest assured that by preparing, you can realize your dream and enjoy the many moments of pure happiness that come with a fulfilling family life.
How much does it cost to raise a child?
The question may seem out of place and many would be tempted to answer that a child has no price, which is very true. But it’s still important to think about this so that you can anticipate your future money needs.
Different Canadian studies have evaluated the cost of raising a child. The estimates range from $10,000 to $15,000 a year per child. But that’s an average. If you want to send your children to private school or if you want them to be able to participate in various extracurricular sporting or cultural activities, these estimates can easily double.
Regardless of the choices you make, it’s clear that having a big family will inevitably entail adjustments to your lifestyle as well as additional expenses, two aspects that you should discuss with your financial advisor to ensure that your long-term financial plan remains on track.
A good financial plan and a budget are a must!
For two adults and three children to live comfortably under the same roof, a bigger house would undoubtedly be appropriate. Similarly, a more spacious vehicle would be required to transport all the family members. These changes alone represent considerable extra costs. The food bill would also be higher, as would clothing expenses. So your financial plan and your budget will have to be reviewed to take these new variables into account.
Since post-secondary education is increasingly expensive, a Registered Education Savings Plan (RESP) could help your children pursue a higher education, if they so wish.
Know that the amounts accumulated in your RESP account grow tax-free and that the provincial and federal government grants (10% in the case of Quebec and 20% for Canada) can increase the accumulated amounts each year by up to $750. If you open a family RESP, all your children can benefit, or these savings can be used only for those who decide to continue their education.
Some points to consider
- With several children at home, you should consider protecting your family’s financial security by taking out life insurance and by preparing your protection mandate and your will. Remember that no one is immune to accidents.
- Wondering if you should send your little ones to daycare or stay home with them for a period of time? Calculate the total cost of daycare and compare that with the loss of income you would incur if you were to take a year off work. When making your decision, you should also consider your personal and couple values.
- Do you have a tendency to overspend? By keeping better track of your expenditures, you’ll avoid losing control of your finances and the whole family will be better off!
It’s possible to start a big family while remaining focused on your financial goals. Speak with your Professionals’ Financial advisor about the choices available to you and benefit from his advice and experience.