As Back-to-School Week continues at Morningstar Canada, it looks like Reddit parenting is also talking about the costs of having children. Between increased inflation, sky-high real estate prices and rising interest rates, many Canadians are left wondering whether parenthood is a financially viable option for them. In fact, a quick search through the popular Personal Finance Canada subreddit will turn up questions about the financial sacrifice of becoming a parent, how much it costs to raise a child, and financial tips for saving money as a parent.
Reddit Parenting - How Much Does a Child Cost Per Month?
Recently, Redditor u/MindfulnessWelcome asked r/PersonalFinanceCanada, “How much does a child cost per month?"
The original poster (OP) said he is doing some future financial planning and trying to figure out how much to budget when his fiancée and he eventually have kids. “We're planning to have 3 or 4 kids, if possible, but want to make sure that it's financially prudent. From what I can tell, as long as we have about $1500 per month in disposable income, per child, we should be set. So if we have $6000 per month in disposable income (that means not including housing, insurance, car, recurring bills, etc.) then we should be good,” he said, asking if his theory was right.
The OP lives in Toronto.
Canadian Reddit users were mixed in their responses. Here are edited excerpts of what some had to say:
Reddit Canada on the Cost of Raising a Child in Canada
$1500 a year is typical - which is $125/month.
u/veerKg_CSS_Geologist
Parent of a 6- and 3-year-old in Ontario. 90% of the cost is lost income from one parent not working, and/or daycare. It's gotten much better since they started rolling out the phased $10/day program. We started out at $480 bi-weekly for daycare but last year those expenses were cut in half. After school care for our 6-year-old is around the same ($150-200 bi-weekly IIRC). My advice is to just research and budget based off the costs associated with daycare. If you can afford that, you can likely afford the kid.
u/msaik
Don't be turned off by the costs, there is no realistic way to be able to anticipate what a family will cost. Lots of the expenses can be modified based on the choices you make. Have 1 baby, see how you feel. Parenting is almost never what you expect. If you end up having 3 or 4, great. If you decide to stop after 1 or 2, also great. Don't get too tied up in the idea of what you think you want now before you have any sense of what parenting will be like for you.
u/ApprehensiveCycle741
Don't forget about RESPs!
u/enlitenme
They get more expensive as they age. Competitive sports? Budget at least $400/month for one activity. Plus travel. I commute more for kids activities than I ever did for work. I will say, having multiple kids really motivated me career wise so I had to worry less about some of these costs!!!
u/Alexandermayhemhell
A child is as cheap or as expensive as you make it.
u/Greedy-Knowledge6043
Morningstar Highlights 3 Considerations on Child Care Expenses
Morningstar contributor Pira Kumarasamy points out that when it comes to costs, expenses like clothing and toys are relatively nominal. The most significant costs of raising a child are related to other expenditures. Here are three big ones:
- Childcare - Jason Heath, a fee-only certified financial planner and managing director at Objective Financial Partners talked to us about these costs, and he says: “Daycare costs can be so variable. There’s so many things that play into the final number, including whether you have a stay at home parent or help from family, whether you have a part-time home daycare, vs full-time daycare.” Irrespective, he says that daycare and childcare costs are a significant factor for which people need to budget, as in some cases they could hit $2,000 per month.
- Education – It might be stressful to think about paying for a child’s post-secondary education even as we’re paying back some of our own loans. While paying for a child’s education isn’t an absolute necessity as a parent, with the rising cost of education, it’s something many parents have prioritized to help their children avoid large debt loads. Investing early in a Registered Education Savings Plan (RESP) is arguably the best way to do this. The best way to leverage this account is to contribute the $2,500 threshold, for which 20% ($500) is matched annually by the Government of Canada. But it’s not easy. This equates to about $200 per month, or even double or triple that amount depending on the number of children you have.
- Activities – Extracurricular activities end up costing a lot. Even as quickly as childcare costs get removed from the equation, activities replace some of that spending. Sports can cost anywhere from a few hundred dollars to thousands of dollars annually. These are discretionary expenses that can be limited based on budget. Heath also notes that he often sees clients end up surprised by unanticipated costs like tutoring or healthcare costs that may not be covered by a medical plan, for instance for a child with learning disabilities. “It’s like buying a car or buying a house – you have to expect there will be unexpected expenses that come out of nowhere. So plan for the unexpected.”
Warren MacKenzie, a fee-only financial planner and head of financial planning at Optimize Management, acknowledges that having children can be a significant expense, but does not believe it is a reason not to have them.
“It is clear that if a couple decides to have children, they’ll find a way to cover the cost,” he says. “There is no other expenditure that has the potential to give such joy and give one’s life such meaning and purpose.”
If parenthood is a priority, it is important to plan accordingly based on your income, cost of living, and what you feel your budget will allow for. It may be more achievable than you think.
