New parents? You can take baby steps

Having a baby is a beautiful and completely new experience, as you care for your newborn around the clock. You may never have felt so much responsibility.

Caring for your baby isn’t the only part of your life that changes—your financial life also evolves.

Financial changes

You might pay extra attention to savings, perhaps using a Tax-Free Savings Account (TFSA) to pay for child care down the road. Also, consider the following wealth planning components.

Purchasing life insurance. For some, getting married or buying a home is the trigger to purchase life insurance, but many people first get life insurance when they become parents. Even those who already have life insurance typically purchase more when they have a baby—enough to cover the costs of raising the child and funding their education until they become financially independent.

Updating your will. When you have a new child, you should update your will, or make a will, so you can name a guardian or tutor. You can also talk to your lawyer about using your will to provide for your child financially.

Saving for education. Now may seem early to plan how you’ll cover education costs, but a post-secondary education can be very expensive. If you contribute to a Registered Education Savings Plan (RESP), you can receive Canada Education Savings Grant (CESG) funds. The government matches 20% of your contributions, up to $500 each year, with a lifetime maximum of $7,200.

One step at a time

There’s no need to tackle everything at once. You can manage these to-dos one at a time. Here are suggestions on how to get started.

You may want to learn about choosing life insurance beneficiaries. In the case of a couple, each spouse typically names the other as the primary beneficiary, and may name the child as the contingent beneficiary. A single parent may want to name their child as the primary beneficiary. Designating your child as a beneficiary is an option, but consult an insurance professional or lawyer to ensure your child is able to receive financial support from the insurance benefit before they reach the age of majority.

Before you make or update your will, take your time considering whom you wish to name as guardian and get their blessing.

Consider opening and contributing to an RESP earlier rather than later. This way, your contributions and the grant money have more time to grow and compound.