By Kaleigh Sainthill
(NC)—The estimated cost of raising a child from birth to 18 years of age varies widely, from $150,000 to as much as $300,000. It makes sense to review your finances when planning for parenthood.
“While children bring great joy, they affect both your lifestyle and your pocketbook,” said Dennis Tew, chief financial officer of Franklin Templeton Investments Corp. “Financial planning for your new arrival will ensure your family’s future won’t be filled with question marks.”
Consider these five tips to keep your financial expectations in check:
1. Upfront expenses. Budget carefully for your family’s “start-up” costs, including new furniture, clothing and supplies like diapers. Plan for a potential temporary drop in income due to parental leave.
2. Child care. Day care costs fluctuate widely depending on where you live, from $200 to more than $1000 per month. Research affordable options in your community.
3. Education. Post-secondary education costs are rising. Invest in a Registered Education Savings Plan. “If you put in $2,500, you’ll be eligible for the maximum Canada Education Savings Grant of $500, which can really add up,” said Mr. Tew. More information on RESPs is available at www.franklintempleton.ca.
4. Re-evaluate or renovate. Don’t buy a larger house with a baby on the way. Instead, adjust your current residence to work for your growing family.
5. Avoid keeping up with the Joneses. Beware of extravagant expenses that you can’t afford and stick to your budget.