Generic filters
Exact matches only
Filter by Custom Post Type

Toronto, Canada

312 Adelaide Street West, Suite 301
Toronto, Ontario - M5V 1R2
Fine Print

5 Financial Mistakes New Parents Often Make (And How to Avoid Them)

Written by Pete McGovern

A little extra planning now will help you avoid a lot of financial stress down the road – and ensure that your family is provided for no matter what.

When you become a parent, everything changes. Time seems to pass both faster and more slowly. It can be easy to lose track of time. Yet, one thing all parents are focused on is giving their child a good future.

Financial stability goes a long way to ease any worries you may have about your child’s future, from diapers to university tuition. Here are a few common mistakes that new parents often make, and advice on how to avoid making them.

You Don’t Talk About Money

Cash, moolah, green, dough, paper—whatever you want to call it, money seems to drive our everyday lives. And yet, many parents feel uncomfortable talking about it. For some reason, lots of us have been raised to view money as a sensitive topic that’s ‘taboo’ to even discuss. Topics like how money can be wisely earned, saved, spent, and invested can be discussed easily around the dinner table – one of you just needs to initiate the discussion. Talking about money regularly will set the tone for your child to grow up to be a fiscally responsible adult.

You Don’t Invest Your Money

Let’s face it, the stock market is super confusing, but surprisingly, you don’t need a degree in economics to make smart investments. A good financial advisor can set you up with suitable investments that line up with your values and goals, meet with you on a regular basis to ensure you’re on track to meeting those goals, and adapt your financial plan to your changing needs.

Jeff Olensky, Wealth Management Specialist at Prospera Credit Union, says: “If you go on a trip, how do you get there? You need a plan, and you don’t need to create that plan alone. Let a planner help you – we’ll do the heavy lifting. It’s a journey together.” Developing a relationship with a wealth management specialist will help you create (and achieve) your financial goals now and further down the road. That means working smarter for your money, not harder.

You Haven’t Prioritized Education Savings Funds

Eighteen years probably seems far off, but parents of teens will tell you that it can pass by in a flash. So, if you plan to fund your child’s education, setting aside a sum of money every month should become a regular habit. Before you know it, those small savings can turn into a sizeable amount by the time you’re paying for tuition, housing, books, and other university expenses (and we thought babies were expensive).

The average four-year degree at a Canadian university costs around $40,000 for students who live at home, and closer to $80,000 for those who move away for school. So how much should you set aside? Roughly $200 per month should do the trick, according to some experts. Additionally, if you start an RESP (Registered Education Savings Plan), it can be supplemented by the government – they’ll match up to $500 (per child) of your annual contributions under the Canada Education Savings Grant. Your child may also qualify for a $1,200 B.C. Training and Education Savings Grant.

You Don’t Have A Will

If you thought talking about money was tough, then this is really gonna be a doozy. Nobody wants to think about this stuff but it’s always better to be safe than sorry. Planning for your passing obviously isn’t much fun, but it’s important for your family’s sake to be prepared. It was a surprise to us to learn that in many countries, if you don’t name a guardian in your will, your child’s care will be dictated by legislation. To ensure that your child will be left in the care of the right people, make sure that you have a will and that it has a clear guardianship clause.

You Don’t Have Life Insurance

Might as well just rip off the band-aid and deal with all of the grim financial planning at the same time. Just like setting up your will, life insurance isn’t a fun process. But for a relatively small monthly investment (dependent on each parent’s age and physical health), your child can be provided for after your death or in the case of a debilitating injury. Working directly with a bank, credit union, or licensed insurance broker can provide you with information and options about which insurance plan is right for you and your family. Prospera offers life, disability, critical illness, and long-term care insurance to ensure that your family is protected no matter what happens.

When you’re a parent, especially a new one, the days may seem long, but the years will flash by faster than you expect. Avoid some costly missteps, and protect your family’s finances, by taking a few small steps such as obtaining life insurance and meeting with a financial advisor to develop a wealth management strategy. Rest easy knowing your family’s future years will be as comfortable as possible.

*Opinions expressed are those of the author, and not necessarily those of Parent Life Network or their partners.