What Does It Cost to Raise a Child in Canada?

Maternity employment insurance

Maternity leave in Canada covers you up to 15 weeks. After that, you can take standard parental leave for an additional 40 weeks or 69 weeks for extended parental leave.

During this time your employer must save your position and if you’re lucky they’ll offer some kind of top up, but if not, maternity employment insurance will help you get by.

Employment insurance is meant to replace 55% of your weekly earnings up to a maximum of $573 a week. Those taking extended leave only get an income replacement of 33% up to maximum of $343 a week. You’ll hit the cap if your salary is $51,300 or more. To make matters worse, the income is taxable.

Note that parents in Canada can now take up to 18 months of maternity leave, the payouts just get spread out over that period.

Most couples choose to take the leave one after the other but you could take it at the same time if you wanted. Whoever has the better top up benefits should take more time off, but try telling that to the woman who just carried and delivered a baby.

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Life insurance

Once you have dependents, life insurance is an absolute must. Our children depend on our income, so be sure to have a policy in place that will leave them with enough money to get by until they become self-dependent adults.

If you’re young and healthy, term life insurance is affordable — each $100,000 worth of coverage can cost a non-smoking, healthy 30-year-old less than $10 per month. At that rate, you can definitely secure enough coverage to cover the costs of your funeral, the balance of your mortgage and the cost of a post-secondary education.

Online life insurance companies like PolicyMe use automated-underwriting technology to make the application process — which has traditionally been time-consuming and has come with complicated paperwork and uncomfortable medical exams — painless and quick.

Getting a legit quote takes only a few short minutes and involves a handful of basic questions. And after fully applying for a term life policy through PolicyMe’s website, which for most people will take about 15 minutes, you’ll immediately find out whether you’re approved.

Since I’m being all morbid, don’t forget to get your will done. Many people still prefer to go to a lawyer to get their wills done, but they can charge a fair amount. DIY wills kits aren’t bad, but I think there’s a better solution now in Willful. With Willful, you can create a legally binding will online. You only pay for it once and you get unlimited updates for free. Willful makes creating a will quick, easy, and inexpensive.

Registered education savings plan

Setting up an RESP isn’t mandatory, but I would consider it a cost of raising a child in Canada. You can get $500 free every year through the Canadian education savings grant. The grant gives you a 20% match on the first $2,500 you save every your child turns 17 with lifetime maximum benefit of $7,200 per child. Contributions aren’t tax-deductible but any gains are tax-free.

Lower-income families could potentially get a higher match and they can access up to $2,000 to help kick-start their child’s RESP through the Canada Learning Bond. The money is completely free; no fees and no additional contributions are required.

If the idea of setting up an RESP and investing is freaking you out, consider using a robo-advisor, or automated investment service, such as Wealthsimple. Robo-advisors have low fees and automate your investment strategy. All you really need to do is set up and an account and then choose the year where your child will graduate from high school. The robo-advisor will then invest and balance your RESP with that target date in mind.

Unexpected vet bills don’t have to break the bank

Life with pets is unpredictable, but there are ways to prepare for the unexpected.

Fetch Insurance offers coverage for treatment of accidents, illnesses, prescriptions drugs, emergency care and more.

Plus, their optional wellness plan covers things like routine vet trips, grooming and training costs, if you want to give your pet the all-star treatment while you protect your bank account.

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Day care costs

Where you live will determine your day care costs. Licensed day care in major cities can cost up to $2,000 a month. Unlicensed home care is a cheaper solution and is worth checking out. Regardless of which route you decide on, there are limited spots so put your child’s name on a waiting list as soon as they are born (if not earlier).

With the cost of child care so high, it might even make sense for one parent to stay home for an extended period. My wife and I personally checked out close to a dozen day cares before we settled on one that made the most sense for us. We were fortunate that our first choice had availability when we needed it.

Canadian child benefit

The cost of raising a child in Canada is offset by the Canadian child benefit which provides up to $6,639 per year ($553.25 per month) for each eligible child under the age of 6, and up to $5,602 per year ($466.83 per month) for each eligible child ages 6 to 17. This benefit was created with lower-income families in mind.

If you’re in a household that earns a higher income, there’s a possibility that you won’t qualify for the Canadian child benefit. Some people find that to be unfair as they may still have to pay for childcare and other expenses, but I don’t mind the current system. Use the child and family benefits calculator to see what you’re entitled to.

Final thoughts

Having a baby is a serious decision and one that should be made with our finances in mind. Most parents will divert all their savings towards their children, but it’s foolish to ignore your own retirement savings in the process. The last thing you want is for your child to be part of the sandwich generation.