Finances brochureindd

Money Money is sometimes the last thing that parents-to-be want to think about. It is more pleasant to spend time imagining the joy that a child will bring! However, it is a good idea to take some time to think about the practical stuff too. The arrival of a new baby, without doubt brings financial changes. The financial impact that children can have on the family is significant and not always easy to balance. Three out of four couples with children count on the earnings of both parents. The approximate cost of raising a child to the age of 18 is $165,000 dollars. The rewards however are priceless! Before Baby BEFORE YOUR BABY ARRIVES Develop a financial plan and consider these questions. ✔ What supplies will you need for your baby for the first year and how much will they cost? ✔ Do you have a steady source of income? ✔ Do you have any savings? ✔ Are your monthly bills higher than your income? ✔ If both of you work, will one of you stop working when the baby arrives? For how long? Do you or your partner qualify for maternity/parental leave? Will either of you be eligible for extra benefits from your employers? ✔ If both of you stay at work, who will care for your baby, and what will it cost? ✔ What part of your world will change? Think about entertainment, sports, activities, time and energy. ✔ What things are the most important to you? ✔ Do you need to make any changes in how you spend your money? Think about your spending patterns. Tips TIPS FOR STRETCHING YOUR $$$ When shopping for your baby, it is very easy to get wrapped up in all the wonderful and cute baby stuff available! Here are some tips that you may want to consider to help stretch your dollars. A few questions to ask before purchasing used items are: How old is it? Are the instructions with the item? Be sure to carefully inspect clothing and equipment to make sure that they are safe. Diapers - Go for cloth instead of disposable. Cloth diapers are not what they once were. They come as all-in-one diapers and are as easy to use and as effective as disposables. And they are about half the cost of disposables, if you launder them yourself. Another bonus is that they are better for the environment! If you choose disposable diapers, generic brands are cheaper. Baby Wipes - Use wet baby washcloths or moistened paper towels instead of buying baby wipes. If buying baby wipes, always buy unscented products. Plan to Breastfeed for the First Year or Longer It is free! Breastfeeding is best for baby and mom! Not only does breastmilk provide many health benefits to both baby and mom, it is ready to serve, always the right temperature, and available any time, anywhere. Borrow, Exchange, or Buy Second Hand Family and friends may have baby furniture and clothing that you can borrow. Perhaps you have items not being used, that you could swap with family and/or friends. Quality used items can be purchased from second hand stores, garage sales, friends and family. Keep in mind that your baby will not know whether he or she is wearing designer clothing. Decide on ‘Needs’ Versus ‘Wants’ Never purchase items spontaneously. Be aware that there are many baby products marketed towards parents, making them feel that they need to have them in order to be good parents and to have smart kids. Be clear on what you really need before you go shopping for your baby’s gear! Start a family purchase policy to avoid impulse buying. Before buying an item, wait a couple of days and then decide if you really need it. A crib and car seat will be the most expensive purchases, and are ‘must haves’. A stroller is useful too. There is no need to spend money on toys - you are the best toy that your baby can have. If you buy a second hand car seat, find out the history of the seat, and be sure that an instruction manual is included. See Transport Canada at www.tc.gc.ca/roadsafety/childsafety/menu.htm. Check Out Child Care Options Now Get ready for the biggest financial shock - the cost of child care! If both parents will be working, start investigating your options long before you need care. Day and child care centres often have waiting lists. Visit www.pfrc.ca for information about choosing child care. Think About the Little Things They all add up! Formula - If formula is what you choose, generic brands can be cheaper and just as good as brand names. Formula will cost about $120 per month. Clothes - Babies grow fast, so only buy a few newborn sleepers to start you off. Then buy bigger sleepers so that baby has some room to grow. If you use a sleep sack, it must fit and not be big, so that baby does not suffocate. Buy clothes on sale at the end of the season in larger sizes for the next season. Be Picky, Picky, Picky About Safety When you buy used or new products, always check the label to ensure that current standards and regulations have been met. Used products may pose safety concerns if standards or regulations have changed. You can call the Consumer Product Safety Department at 1-866-662-0666 with questions about product safety. Basic Rules BASIC RULES OF MONEY MANAGEMENT Plan for major purchases, periodic expenses and the future. Decisions need to be made about life insurance, wills and your baby’s future education. Make a plan. Take the time to figure out how much money you will have, and what your expenses will be. (Use the Budget Worksheet provided.) Set financial goals - short, mid and long term. Know your financial situation. What are your monthly living expenses, periodic expenses, and your monthly debt? Make a realistic budget. Follow it as closely as possible. Evaluate your budget, and compare actual expenses with planned expenses. Use credit wisely. Use credit for safety, convenience and planned purchases. Determine the total you can comfortably afford to purchase on credit. Don’t allow your credit payments to exceed 20% of your net income. Avoid borrowing from one creditor to pay another. Keep a record of daily expenditures. Be aware of where your money is going. Use a spending diary to assist you in identifying areas where adjustments need to be made. Budget Worksheet BUDGET WORKSHEET TOTAL MONTHLY INCOME (Enter your total monthly income here.) Monthly Expenses Housing (mortgage or rent, property taxes, insurance, etc.) . . . . . Utilities (heat, hydro, water, phone, cable TV, internet, etc.) . . . . . Food, supplies and maintenance (groceries, cleaning supplies, etc.) . . Transportation (car loan, insurance, gas, oil, repairs, bus, etc.) . . . . Clothing (footwear, clothing, dry cleaning, etc.). . . . . . . . . . Loan payment (student loans, credit cards, etc.) . . . . . . . . . Personal care (hair, coffee, lunch, tobacco, alcohol, etc.) . . . . . . Healthcare (life insurance, dental, medical, vision, etc.) . . . . . . Recreation & entertainment (vacation, hobbies, education, books, etc.). Pets (food, licence, veterinarian, etc.) . . . . . . . . . . . . . Savings (10% income, Registered Retirement Savings Plan, etc.) . . . Extras (gifts, donations, furniture, appliances, etc.) . . . . . . . . Total your monthly expenses here. . . . . . . . . . . . . . Additional Baby Expenses (Some expenses are one-time expenses.) Baby equipment (crib, car seat, stroller, etc.) . . . . . . . . . Furniture . . . . . . . . . . . . . . . . . . . . . . Diapers (cloth or disposable) . . . . . . . . . . . . . . . Feeding baby. . . . . . . . . . . . . . . . . . . . . Clothing . . . . . . . . . . . . . . . . . . . . . . Toys . . . . . . . . . . . . . . . . . . . . . . . . Child care . . . . . . . . . . . . . . . . . . . . . . Health needs . . . . . . . . . . . . . . . . . . . . Other (Registered Educational Savings Plan, etc.) . . . . . . . Total your additional baby expenses here. . . . . . . . . . . $ ______________ . . . . . . . . . . . . . . . . . . . . . . . . . . ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ $ ______________ Help Credit Reports: www.equifax.ca www.tuc.ca HELP CLOSE TO HOME Counselling Services: www.ccrc-ptbo.com/credit_counselling.html (good links) Community Counselling & Resource Centre (705)742-1351 www.oaccs.com Ontario Association of Credit Counselling Services www.creditcounselling.com www.money.msn.ca www.stretcher.com www.tuliptreepress.com Budgeting and Cost Cutting: Don’t allow expenses to exceed your income. Avoid paying only the minimum on your charge cards. Don’t charge more every month than you are repaying to your creditors. Save. The 10% rule is recommended. Put away 10% of your net income and watch your savings grow. It is important to have money set aside for unexpected expenses. Put money away for retirement. Open a Registered Retirement Savings Plan (RRSP). Take advantage of income tax rules which allow for tax deductions for retirement plans. When your baby arrives put money away in a Registered Educational Savings Plan (RESP). Pay your bills on time. Maintain a good credit rating. If you are unable to pay your bills as agreed, contact your creditors and explain your situation. Talk to credit counselling services to learn about options available to you. Decide what your ‘needs’ and ‘wants’ are. Take care of your needs first. Spend money on ‘wants’ only after needs have been met. Banking: www.cba.ca The Canadian Bankers Association homepage offers banking news and a list of free resources you can order. Topics include planning for retirement, money management and more. www.hrsdc.gc.ca/en/ei/types/special.shtml This site will provide you with information on parental, maternity and sick benefits. www.ccra-adrc.gc.ca The Canada Revenue Agency web page provides some tax information, news and publications. www.canlearn.ca This site will give you advice on how to save, plan and pay for post-secondary education. Government: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ $ ______________ $ ______________ $ ______________ TOTAL MONTHLY EXPENSES (Total your monthly expenses + your additional baby expenses.) MONEY LEFT OVER (Subtract your TOTAL MONTHLY EXPENSES from your TOTAL MONTHLY INCOME.) If you have no money left, or a negative balance, see the section HELP CLOSE TO HOME for assistance! Budgeting for baby www.pcchu.ca 705-743-1000 Parts adapted with permission by the Best Start Resource Centre. Produced by the Peterborough County-City Health Unit. December 2006.