Now that the family is on a fairly predictable path with respect to school, work and home it’s a good time to plan for the next stage. A few things to think about in Part 4 of Financial Planning for Kids:

1. Is the family budget stable? Have you got enough allocated for clothes & sports?
2. Do your kids know about the household budget and are they aware of how expenses relating to them impact the budget?
3. Do you give your kids an allowance? Do they have a job? Do they understand the value of money?
4. Do you have a financial plan for their education and your future?

It’s easy to lose sight of the big picture when the daily routine is front and center. It can also be challenging to focus on goals that seem so far in the future. And let’s not forget how tiring it is just to get through the week. A small investment of your time now can mean huge gains in the future for you and your family. Set small and manageable goals over the next month or two and before you know it you’ll have designed the plan. Include your partner as well as your children (if appropriate).

1. Gather the information you need
2. Jot down your goals and prioritize them
3. Review your current budget
4. Size your goals and determine how much you need to set aside monthly or annually to achieve them
5. Determine how you will fit this into your budget
6. Set up the savings plan(s)

This is part 3 of a 4 part series on the cost of raising kids…more to the point, how to budget for them. This feature explores some of the financial considerations as kids approach school age. Full time child care is costly however can be very convenient. I’ve just started researching the options for child care once kids begin school. You’d think that full time kindergarten might help out in this regard but we will still be faced with before and after school care.

The largest expense for dual working parents is child care. Similar to pre-school child care, the main concerns are around availability, standards and scheduling. Some schools offer before and after school care while others do not. The long and the short of it is that there are registrations, wait lists and it has a place in your budget. Don’t forget to plan for the school holidays, Pro-D days and District Closure days.

Other costs relating to kids nearing this age are pre-school costs (varying from $100 to $500 per month), before/after school costs ($200 to $1,000), school supplies, fundraisers, camps, sports and/or arts and music classes. These are in addition to clothing, gifts, entertainment and food.

Time to update and revise your budget. What child care arrangements work for you? There are some creative solutions!

Considerations include:
You may find that you still need your nanny
A part time work schedule affords more flexibility but your pay check is smaller
If you find that your overall expenses are less…check your financial plan to see what goals and objectives you can apply the extra $ to – Increase your mortgage payment? Add to your RSP’s? Add to your child’s RESP’s?

It may seem like a long way away but before you know it, your little one will be off to school and then off down one of life’s many paths. You may wonder how you can possibly predict what your child may choose to do and be nervous about saving money for an event so far in the future. The reality is that if your child pursues post secondary education it will be a large expense and it is easier to begin saving now. The other benefits include the Canada Education Savings Program (CESG) grant (free money!) and a reduced need for student loans.

The registered education savings plan is administered by the Canadian government and is quite flexible in terms of qualifying programs when it comes time to invest in post secondary education. If all else fails, the funds in the plan can be withdrawn subject to certain but not onerous tax implications.

Here is some quick info:
There is no annual limit for contributions but a lifetime maximum of $50,000
The CESG paid is calculated on your contributions – 20% to a maximum of $500 annually and $7,200 lifetime per beneficiary (note that if unused contribution room is made, up to $1,000 CESG per year may be paid)
You may be eligible for a higher grant based on your household net income
Tip: To maximize the payment of the CESG, contribute $2,500 per year. 20% of $2,500 = $500.

You may wonder where you will find $2,500 per year to put in an RESP. I use the UCCB of $100 per month which adds up to $1,200 per year – a good start. Grandparents may be willing to help out and tax returns are other resources.

As to where to invest it…check with your banker for options. Depending on your risk tolerance, the time line and investment knowledge you will have several choices. To make it low maintenance, set up a monthly purchase plan. The CESG will be paid in automatically.

For detailed information:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/resp-reee/menu-eng.html

Once baby arrives the concepts of time and money take on whole new meaning! I found that babies didn’t cost a whole lot to feed and cloth. It depends on the choices you make.

Formula costs more than nursing however sometimes you don’t have an option. Cloth is cheaper but more effort than disposables (not to mention waaaaaaaay less garbage). That being said, I managed cloth for 1 year with my first but after 6 months with my second, I sold the kit to someone else. I feel guilty about the garbage and the cloth wasn’t much more work but they are bulkier and more trouble when out and about. Clothes can be obtained through a variety of stores, second hand stores and personal sale websites.

Otherwise there isn’t much cost during the newborn to 1 year phase. Once they start to eat solids and drink milk your grocery bill will increase. By how much, depends on what foods you choose to offer your child. Pre-prepared and packaged snacks add up quickly compared to fruit, vegetables and regular crackers. It takes a little extra time to read the labels but once you’re familiar with the products that don’t have many additives or much sugar/salt it is much faster to shop.

We did change our eating habits as time becomes precious. Ordering in was always tempting but a quick way to burn through the budget. We learned to limit this to once a week or once every couple weeks. Quicker preparation meals became a daily pursuit. No longer did we have the time to leisurely prepare yummy meals or try new recipes. Basically we were pleased if we got to eat our meal warm and in one sitting! Still, keeping it simple and trying to keep the food nutritious makes for a happier and healthier family.

In my experience:

1) Preparation for a new baby: $1,000
2) Monthly grocery bill increase per toddler: $50
**See notes below!

What was your experience? We’d be interested to know.

The biggest financial impact is more likely to your household income. Next post will be about what to do about government payment, education savings plans and other costs.

**1) We used a co-sleeper/play pen as a crib (2nd hand), bought a 2nd hand stroller/infant car seat, were given many clothes, bought some, bought a dresser/change table, were given a baby carrier, bought toiletries, bought a car seat.
**2) Yogurt, apple sauce, Cheerios, baby cereal, grapes & other fruit/veg

Ideally you have the time to take a look at the financial impact of preparing for a child before it arrives! Now is the time to take a look at two budgets.

1. Baby stuff
2. Household finances

I touched on the first one last post….a good way to get an idea of costs for various items is to have a look at a couple stores and at compare new to used. There can be a huge difference in cost. Used can often be purchased at 20 – 30% of new which can quickly add up. Draft a list of items that would be suitable gift ideas. Many family and friends will be excited to celebrate with you and will want to buy a gift. If you provide suggestions, you’ll get the items you need/want and reduce the duplications. Here are some items commonly included on the ‘baby list’: car seat, stroller, baby carrier, sleeping place, blankets, receiving blankets, toiletries (thermometer, soap, shampoo, brush, nail clippers, diapers, wipes, cloths) and some cosy clothes. An infant doesn’t need a whole lot. Each 6 months, babies develop…significantly! Expect some costs with each stage. The next stage can lead to more equipment, food and clothes etc.

The next budget to take a look at is Household Finances. The biggest impact of having a child in your life is the change to your household income. Recognize that your contribution to the household income will reduce to the government maternity maximums plus any top up that your employer may provide. This can be a substantial reduction to your income. Don’t forget that there may be reduced expenses by staying home as opposed to going to work. The biggest impact will come when your maternity leave ends and you return to work or stay home with the child. In the first scenario, you will require child care for your child and the costs for this vary by type of child care and location. Check out a couple places in your area to get an idea of the monthly fees. They can range from $500 to $1200 or up to $2500 if you choose to go with a nanny (the live in option reduces the monthly nanny wage by approximately half if you provide room and board). If you decide to stay at home, then your household must operate on one income only.

It can be valuable to jot down the budgets so that you can decide how to set up your household and how you will spend your money.

1. Baby Stuff: List the items and the amount you expect to pay
2. Household Finances: Quantify your income for the 2 stages (while on maternity leave and after maternity leave) and list your expenses

Having a baby is an extraordinary experience. Whether you are able to have your own, adopt or by some other arrangement it is so exciting. The anticipation is magnetic and you can find yourself in a whole new world. One filled with decisions to contemplate, things to learn and looming responsibilities. There are stores and websites which sell everything you need, stores which you’ve never noticed before.

Like any other major life event, it’s worth doing a little planning. It can seem like a bit of a drag to think about the financial impact however a small amount of preparation can make a big difference later on.

There are several phases to consider and Dear Piggy will highlight each one over the next few posts.

1. Planning & preparing for the arrival
2. Baby has arrived
3. Maternity leave is coming to an end
4. Life with young children
5. What’s next?

Part of the process is preparing a place for the baby to sleep. For many, decorating the nursery is a big step in visualizing reality. As well as a place to sleep there are clothes, a stroller, a car seat and endless other baby products.

Depending on how much you choose to prepare, these purchases can add up VERY quickly. Especially if you buy new and if you buy everything on your list before you need it. It’s not a bad idea to do a little research – how many strollers do you really need? I thought a friend who admitted that she had 4 was out of her mind. 4 or more is not uncommon! There are strollers on the market that adapt as your needs change. One that takes an infant car seat, one that rides over uneven terrain, one that folds up compactly, one that travels well, one that carries 2! The list can go on. It’s worth doing the research to find out what you need before you make the investment. They can cost anywhere from $40 for an umbrella stroller to well over $1,000. Or you can buy the $1,000 stroller for $250 second hand. Believe me, a new one won’t look new for very long!

Children change quickly in their first years and as a result, baby equipment is in your life for only a couple months. Where do you want to spend your money? There are many expenses on the horizon – informed choices can afford the future lifestyle you envision.

Financial Planning may seem like a scary concept. It doesn’t have to be. You can begin with a basic financial plan and develop it as you go. As long as you start with a good foundation you will be able to add on to your basic money management house as your needs become more sophisticated.

It all starts with having a good understanding of the everyday numbers. Income and expenses. The other key piece to lay out is what you want to achieve. What are your financial goals? What is the time line associated with each goal? What will each cost and which one is top priority? This is the start of your financial plan. If you’re intimidated or overwhelmed, don’t let that prevent you from getting started. Dear Piggy Bank (www.dearpiggybank.com) is ready to help.

Some people like to shop without a list and travel the aisles with a basket. I prefer to take my list. I have a running list to jot down items as I need them and add to the list after making the weekly menu.

I rely on the menu as I find it easier to put food on the table if I’ve already got a plan and the food is in the fridge. If left to ‘create’ a meal from what’s in the fridge or cupboards – the easy and maybe not so healthy option is likely to win!

I find that I throw out very, very little food at the end of the week. Good for two reason: 1) Less food wasted and 2) Less money wasted. Did you know that the average person throws out approximately 30% of the groceries that they buy?

The other benefit to being organized when I go in the store is that I pick up items when they’re on sale or wait to buy them when they’re on sale.

Like most forms of ‘insurance’ the hope is that it’s never needed. Life dishes out some unexpected surprises and having a contingency fund provides piece of mind. How to build one? With so many demands on the paycheck it is hard to set aside funds when ‘just in case’ seems unlikely and far away.

The consensus is that the equivalent of 6 months salary is the size of fund to set up. Even though you may have access to employment benefits, monthly expenses continue relentlessly and replacing your regular monthly income may take longer than 6 months. Don’t forget to consider other factors unique to your situation in calculating the size of emergency fund you need. If your work is highly specialized and/or you are the primary breadwinner in your family, you may feel better knowing you’ve got enough saved to last you longer than 6 months. This guideline assumes that your household expenses will be covered with this income level.

How to accumulate a sizable amount of money? You can set up a monthly savings plan. A good way to reach your target is to divert any chunks of money you receive that are not part of your regular paycheck. Tax returns, bonuses, gifts or raises. It’s amazing how quickly these amounts add up. Direct them straight to your savings!

With two small children it’s debatable whether a long weekend away is a holiday. Mike doesn’t feel like his ‘batteries’ are re-charged. Not surprising when you reflect on the energy output it takes to pack us all up, go away and come back versus the actual R&R time achieved. The relax time is the easy number to calculate…..about 3 hours (while the little ones napped)!

The preparation and re-trench time is much greater….A full week of work means a busy Friday evening for a Saturday morning departure. When to do the things to prepare for the week ahead that we usually do on the weekend? Friday night I guess. Oh, and pack for the holiday. A bag for the kids (warm & cold weather gear because the weather man can’t make up his mind), one for us, food (a couple bags), entertainment (soccer balls, buckets/shovels, pool toys), bikes & helmets (kids), play pen, booster seat, DVD player and DVDs, and of course, the snack bag. We’ll stop by the liquor store en route! All that takes several hours of lists, packing, packing the car, unpacking, laundry and groceries to start the week.

Now for the $. We booked on Thursday night and for where we stayed, we paid a good rate $150 per night in a 1 bedroom with kitchen, laundry and swimming/hot tub facilities. The annoying part was the $15 per night parking – unavoidable as there was no where else to legally park over night. During the day – yes, overnight – no. Some food, drinks and treats $100 (which we would have spent anyway) and a nice dinner out $120 (sans enfants!). About $600 for the weekend when it’s all tallied up.

Are we well rested? About the same as if we’d stayed at home. Did we have fun? I’d say yes. The kids loved the pool, the parks and staying in a hotel. We got a few quiet moments while they were sleeping and an evening out thanks to Auntie. I suppose like most things it’s about managing expectations and assessing whether you feel you’ve received value for money. In this case I’d say we had an excellent mini-vacation at a reasonable cost.