Baby Savings
Posted by Gail | Filed under Money & Family, Money Management
Congrats! I hear you’ve got a new baby on the way. You must be very excited. Or maybe you’re a little a’feared. After all, this is another mouth to feed. And nobody gets rich on mat leave, right? So what an expecting parent to do? Might I suggest you figure out how to save a little sumthin’ sumthin’ before your Mini-Me makes an appearance.
1. Save to supplement your mat leave benefits. The standard maternity benefits leave very little wiggle room. If you aren’t going to get a top-up from your employer, you might want to start practicing living on less as soon as you find out you’re pregnant. Use the difference between your regular pay and your mat leave income to build up your emergency fund and your Baby’s Coming account. Practicing living on less now means you can get a sense of what it’ll be like when baby gets here. And you’ll have some money for any unexpected expenses that pop up.
2. Save on your baby stuff by shopping smart, borrowing and making do. Babies are a great excuse to spend money. But do you really need a wipe warmer? Hey, just hold the wipe in your hand for a few seconds before using it and you’ve got a warm wipe for baby’s bootie. You’ll save about thirty bucks. How about a change table? Buy a stack of receiving blankets. Lay one out on your bed, the couch or the carpet to change the baby. Savings: $200. Make sure you make a list before you head out to shop for baby. And before you put your hand in your pocket, call your friends and family to find out who has stuff they can lend you so you can whittle down your list. Make sure you register if someone is throwing you a shower so you get stuff you need, not just stuff other people think is cute.
3. As soon as baby is born, get baby a SIN card and open up an RESP. Now you have a place to put the money people give for presents, and you can stash away $50 or $100 a month (to begin with) for university or college. Believe me, that’ll be way easier than coming up with the thousands and thousands (and thousands) you’ll need when your kidlet heads off to the halls of higher learning. The Canada Education Savings Grant will help, but that’s another blog.
August 28, 2012 at 7:09 am
Looking forward to hearing more about the Canada Education Savings Grant . I have been setting aside $60 a month for my son, and I have another on the way. I am confused about RESP’s. I have heard a lot that when tuition is due, that only a certain percentage can be withdrawn, and it rarely covers the entire cost of the tuition. Therefore students are required to find another means of paying the upfront costs until the rest of the money is available from the RESP. Can you speak about this at all Gail? I am debating continuing with my own savings for my sons, but also opening an RESP but only making the minimum payment, to ensure that my boys don’t miss out on the government money. Thoughts?
Thank you so much for these blogs – you have helped my family tremendously! We are not yet debt free, but the biggest lesson that I have learned is all about balance. We now have savings so that if an emergency happens, we aren’t required to use credit. It is so freeing! Thank you so much!
August 28, 2012 at 7:30 am
Just spent a fortunate trying to have one-no such luck. But I would have lived on less, put the rest away, and even on the less -take out diaper, ect… money and stashed that too. Also, would have made some meals to freeze for later ect….. Oh well, guess I’m childfree, not childless- somethings u can plan for like money, but life well it has a plan for u
August 28, 2012 at 8:16 am
Right from the start with both our daughters, when we started receiving the Child Allowance every month from the Canadian Gov’t, we automatically put that money into their RESP account every month. We never “see” the money, and it’s going directly into the girls’ RESP account. So easy to save for their education!
August 28, 2012 at 8:49 am
Thanks for posting Gail. I am also soooo confused about RESPs I would love it if you could write a bit more about it. We have a savings account for our son but haven’t opened an RESP yet.
August 28, 2012 at 8:57 am
I would also recommend buying a small life insurance policy for them as babies…we didn’t and our 5 year was diagnosed with T1 diabetes. Good luck getting anything now! If we’d done it as a baby he’d have a little something to transition into an adult policy. Too late for us, something to think about for new parents.
August 28, 2012 at 9:03 am
Check Kijiji for little baby stuff! It’s amazing what you can find on there for practically nothing. Stuff like swings, bouncy chairs, clothes, nursery furniture, gliders, etc. are going for super cheap. You don’t use many tiny baby things for long, so most of this stuff looks brand new. No one will know if you got it shiny and new out of the box from the baby store or from another mom trying to recover a few bucks that she shelled out for all the same stuff brand spanking new. You can get most of your list for 70-85% off retail (just buy the carseat new and make sure if you buy a used crib it meets current safety standards and is in good condition).
August 28, 2012 at 9:24 am
I agree that additional information on RESPs would be great. Specifically:
1. What are the pros/cons of individual, group, family plans?
2. What are the pros/cons of going with a big bank vs. credit union vs third party?
3. What are the restrictions that parents need to be aware of?
4. What happens if the child doesn’t attend post-secondary?
5. What are the tax implications (both as contributions occur and then as withdrawals occur)?
6. How do RESPs affect the tuition transfer on income tax?
It’ll be great to have all this info in one spot…
Thanks Gail!
August 28, 2012 at 9:49 am
Another great savings plan is one my parents did for me: every month new parents get a cheque from the government (many refer to it as baby bonus) instead of spending it, put it in your RESP or open a savings account. It may only seem like a small amount, but I was able to go to University for 4 years on mine as were my 2 siblings. It meant I left school with zero debt and that is HUGE! Also, bigger cities have baby swapping programs where moms bring in used items and trade for bigger sizes or items. Doesn’t cost anything, just an exchange of something you don’t use anymore. Another great place to look for baby items is Kijiji and yard sales. Sometimes people buy things and never use them and sell them for a fraction of the cost (or free) And when buying a car seat make sure you buy one that converts into a booster seat. Kids have to be in one until they weigh 80 pounds (which is until they are about 6 years old)
August 28, 2012 at 9:51 am
In hindsight our major baby expenses were diapers, formula (once they were done nursing) and daycare. Just about everything else we borrowed, bought used or decided it was useless an not needed. The only things we bought new were the stroller, car seats and playpen/travel bed. Babies whiz through clothing sizes in weeks so don’t have more than a few of each size and just run the laundry a little more often. You won’t want that stuff sitting around long anyway…
In my opinion, the single most useless baby purchase is the crib linen set. It seems to be the first thing most expectant parents buy and then decorate the room to match and it’s completely pointless. If you read the package it tells you not to leave the quilt or pillow in the bed with the child. Since our kids were born I now hear bumper pads are no longer recommended either. The only useful thing in the set is the sheet, and two minutes later they spit up (or worse) on it and you switch to another one. Now you’re left with an entire room decorated around linens you either can’t leave in the crib with the child, or are in the laundry. Does that seem logical? Instead, forget there is a crib and decorate the room for a child up to at least age 5, including linens for a single bed. Then get a crib and several plain sheets that coordinate with that decor. When the crib leaves in a year (or less if you have a climber) you move in the single bed and linens and no redecorating is needed. The pictures in the frames can change to suit their age. A large frame with multiple mat sizes allows you to keep updating. If you choose a gender-neutral colour scheme you can personalize with accessories as the years pass. (note: forget wallpaper and borders which become damaged and/or age in appropriate). Resist the teddy bear lamp. Instead prop a teddy bear beside a lamp that won’t embarass your future 7 year old. We used the dresser as a change table by adding a change pad on top. The wall shelves over it held diaper supplies at first, then stuffed toys, and now trophies and books.
August 28, 2012 at 9:51 am
I stocked up on baby stuff by going to tons of yard sales. That was 10 years ago, now it is so much easier for new parents to save via online yard sales such as Kijiji. I also use coupons. Wait for a sale to take place and use your coupon during the sale price and you double your savings. We still need to get on track with my daughters RESP. I’m going to tackle that this week. Thanks for this post and for giving myself a goal.
August 28, 2012 at 9:53 am
Don’t forget to look to “I’ve Outgrown it Sales” in your area. You will save a lot of money on clothes, swings, jumpers, toy, strollers, shoes buying used. And since babies aren’t really in clothes for long you will probably be able to resell it at one of these sales later on. If you live in the Edmonton Area check out http://www.cityandbaby.com/, she posts all the lastest sales for Spring and Fall.
August 28, 2012 at 10:12 am
Great timing! Just found out I’m expecting Baby #1!
I’ve built up some savings in a “Baby Fund” and will be receiving lots of promised gently-used items from friends and family. I’m resisting the itch to buy buy buy; baby clothes are cute, but I know I’ll get lots of gifts (this’ll be the first baby, grandbaby, and great grand baby in my husband’s family) and would much rather save that money for now.
I work contract/part-time (trust me — I’ve been looking for FT work for over a year) so I won’t qualify for mat leave at work AND I don’t believe I’ll qualify for government benefits because according to my employers, I won’t have worked the requisite number of hours (which is bullsh*t, if you ask me). I work as a university lecturer, and my contract states that for a semester (Sept to Dec.) I’m working 24 hours. This includes lecturing and office hours. It doesn’t include the countless hours I have to put in prepping those lectures or marking. The pay, mind you, is great — it could be worse, I could be teaching in the States — but the contracts certainly don’t reflect the reality. Rant over!
Anyway, because of that, I’ve been faithfully putting as much money as I can away, and have tried to time my pregnancy so I’ll be giving birth in May, and be ready to teach again in the Fall. Not my ideal, but you’ve gotta do what you can, right? Luckily, it’s worked out that way, so I hope to have a very healthy pregnancy, and give birth in the end of April (at the end of the university calendar).
Please, please post a blog about The Canada Education Savings Grant, as I’d love to hear your thoughts on that (though you’ve mentioned it off and on in other posts already). If I’m lucky I’ll get tenure one day, and my child will have a free education (and if that was the case — what would happen to all that money, I wonder?).
Thanks Gail! You’re the best (and so are your readers).
August 28, 2012 at 10:49 am
I would agree that diapers, formula and daycare can be the biggies. We avoided formula by breastfeeding (if you can, of course), and bought inexpensive cloth diapers (about $200 total for one-size that last from newborn to potty training (Flip brand)-the laundry really isn’t that big a deal if you have your own machines-one more load every 2 or 3 days, and no running out for diapers, taking out bags of very stinky garbage etc.) to avoid those two ongoing expenses. Daycare is tough, but once you’ve lived on your mat leave income for a while, you get used to having less disposable income, so if you go back full time, daycare just eats up what you got used to living without when you were on mat leave benefits, in my experience.
I would also agree wholeheartedly about buying a decent dresser and putting the change pad on top, especially if you’re tall. It absolutely killed my back to bend over a bed to change my guy when we were at someone else’s house, compared to our tall dresser with the change pad. When he’s potty trained (oh how I can’t wait for that day!) we’ll just remove the change pad and he has a dresser that grows with him, rather than a fairly useless change table that has to be stored or sold.
August 28, 2012 at 10:57 am
Our first baby is heading off to University, but it seems like yesterday and she was coming home from the hosp. with us! I was a stay home mom, and when baby #2 came i worked part-time evenings until she started grade 1. The larger expenses have been activities, but school can nickel and dime you-suggest always having a cash slush fund just for that-field trips, transportation expense, etc..Regarding the Resp’s-where else can you get 20% on your deposit? (up to $500 max/yr i beleive), in Canada Savings Grant-that’s the beauty of it to me. To all the expectant parents, enjoy your gift when he/she arrives. Parenting will be the hardest yet most rewarding journey you will be blessed with!! Have a good day everyone.
August 28, 2012 at 12:53 pm
Psychsarah – I agree, returning to work for most people doesn’t mean returning to full income, or anything remotely close to it. The cost of daycare generally consumes most or all of the increase in income by going back to work. The reduction while you are on maternity leave is just your new reality. It’s not really a temporary reduction for many people, so while a baby fund is a great help to offset the equipment you’ll need, you need a far more comprehensive plan to be able to live on way less than you did before. If you make a very large salary then you’ll be able to cover daycare and still have an increase left over. Our kids averaged $1000/mth and that was several years ago. When our son attended private school for 5 years it was hardly any more.
It’s unfortunate that part of deciding to have a family doesn’t include a lot more financial planning than most people seem to give it. A work colleague of mine announced she was pregnant and immediately launced into all the things they would need for the baby, including that they were planning to move to a bigger place and get a minivan or SUV. I managed to talk to her one day about daycare and she clearly had no idea what it cost. There’s been absolutely no talk of moving and new vehicles since then. Hmmm.
August 28, 2012 at 12:54 pm
That’s $1000/month per child, just to be clear.
August 28, 2012 at 1:29 pm
I use my ‘baby money’ to buy my son’s RESP. It’s only paid for a limited number of years and as I’m a single mother, I don’t want to need to depend on it. Plus, I get a little bit of the Government grant money – $20 a month. I don’t pay enough into the RESP to get the maximum grant money, but I figure a little something is better than nothing.
Also, ING is currently having a special promotion that if you open a bank account before August 31, with a minimum of $100 balance, they will give you $50! That’s half your investment! (yes, I will get that $50 too, but it will just go into my son’s savings account).
The child savings account currently has a rate of 2%, and I was able to open my son’s as a joint account so I have access to it (to transfer money into, nothing will be coming out of it for a long, long time!)
You just need to use someone’s orange key for this bonus offer, please feel free to use mine: 17035926S1
I thank anyone and everyone who uses mine.
Plus it’s the best interest rate I can find on a child’s account. I made more money for my son’s account in the first 10 days that it was open then from TDCT for over an entire year!
Plus ING has a TFSA for 1.4%, savings for 1.35% and a free chequing account!
August 28, 2012 at 1:32 pm
sorry, the website might be helpful:
http://www.ingdirect.ca
August 28, 2012 at 2:44 pm
My baby is off to university in less than a week, Yikes that happened fast.
When our baby was ready for formula, our doctor would give us cans of the stuff by the case if we asked. She also supplied us with Tempra (childrens fever reliever) in sample sizes by the handful. At the time my husband was not working (cancer) and did not qualify for assistance, and this help made a huge difference in our expenses.
There are tons of companies that will offer discount coupons, and tons of free samples from diapers to formula to baby wash. Just go on-line and look. I also found that “mom and me” groups (often city run) were a great place to network with other new mums, exchange baby stories, trade un-used, or no longer needed baby stuff and make lifelong friends.
August 28, 2012 at 2:47 pm
@ periwinkle – this has a very good posting/discussion on RESPs
http://www.canadiancapitalist.com/is-a-group-resp-plan-right-for-you/
There’s 200+ comments.
@ jenna – it’s a little complicated but your resp is made up of contributions+earnings/grants. In the first 13 weeks, the student can only withdraw $5,000 from the ‘earnings’ aspect of the RESP, with no restrictions after that 13 weeks. The student could withdraw from the other side, their contributions, but it seems better to do it from this side. In any case, it seems manageable. Unless your child is 17, they might change the rules in the future anyway.
The 20% match from the RESP means it makes a lot more sense to set everything in the RESP in my opinion. Even if you have to take a loan for 13 weeks to cover whatever the $5K doesn’t cover, the 20% return will be greater than the interest paid.
See http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/the-abcs-of-how-to-withdraw-from-your-resp/article4256625/
August 28, 2012 at 4:10 pm
oh p.s. Formula, baby clothes, furniture etc aren’t cheap.
But daycare was without a doubt the biggest kick in the teeth my wife and I got. In Toronto we paid $1,675 / month from month 12 – month 18, then $1375 from month 19 – 36, then $1225 until he started JK, and now pay $760. Add it up, it’s well over $40,000. My son is 5 now.
And that wasn’t the most expensive we heard, and that was only amongst the few daycares that I found that were taking new kids.
And you can only claim up to $7000 in costs (a joke).
August 28, 2012 at 7:03 pm
We too put our monthly child tax benefit straight into our girls’ RESP’s. They are 9 and 4 now, and have $14,000 and $6,000 respectively. I also did the insurance thing for our girls, and pay under $100 a year for the 2 policies… worth the peace of mind for future insurability, and it’s redeemable for cash at 18 if they don’t want to keep the insurance.
August 29, 2012 at 12:59 am
Aimee – wow – and congrats! It’s funny as I read Robyn’s post I was thinking, gee, $100 bucks + 20%/month for 18 yrs (not sure how long the child tax benefit lasts) would be $25,920 withOUT any growth! That is an amazing amount for education for $100 a month!
That and a p/t job could equal degree without debt!! AWESOME 
RE: Baby Savings
Wish I knew what I did with my 2nd when I had my 1st! We tried to buy everythink but the car seat 2nd hand, no luck with the crib, but we were able to purchase a new one and mattress for a reasonable amt. If it wasn’t a gift – it wasn’t new was pretty much my motto
I figure as far as clothes go you need to wash them 1st anyway, so they aren’t exactly “new” in any case. I frequented 2nd hand stores, Goodwill, Salvation Army and had a TON of clothes, blankets, sheets, toys and plush (you can wash and dry them! – however when I washed her lion with its big mane, I made the mistake of putting it in the dryer and it ended up with an afro! LOL)
CLOTH diapers were the way to go for us – saved us a small fortune, never mind the stinky garbage. With them being form fitted and with velcro closures it’s very close to putting on a disposable. Plus not having to run to the store for diapers with an infant, so easy to just drop ‘em in the wash
Congrats to all who are expecting
August 29, 2012 at 1:00 am
Oh, forgot to add, if your Dr doesn’t offer you samples, just ask, they usually have plenty
August 29, 2012 at 8:55 am
Your baby needs a car seat. Your baby needs other items that ensures their safety and security. They need a modest amount of clothing and quality food. Your baby does not need parents who are gone all the time trying to earn enough money to pay for all of the crap they have made the mistake of purchasing because they have been sold on the idea that they ‘need’ it. Your baby does not need to hear the arguments and slamming doors as the parents fight over who wasted what money where and on what. Your baby does not need to be shoved into daycare because the parents were not mature enough to say ‘no’ to their impulses and addictions and place what’s truly important ahead of their own stupid and selfish desires.
Your baby needs you. A well-rested you. You are going to become a parent. It’s time to grow up.
August 29, 2012 at 9:42 am
@ Connie – I’m pretty sure my baby needs a roof over his head. That means my wife and I both working. (yes, I could move into a one room trailer in the desert, I realize I’m not thinking creatively.) Most of us with kids in daycare would rather be at home, we just can’t afford that.
August 29, 2012 at 10:06 am
@Connie and @Geoff True….my child needs a home and food which means we both work, and not because of foolish or selfish desires. It is expensive to live where we do, and that is where the work is available. Also, we need the employee medical coverage and if we didn’t have it we’d have to spend as much on our child’s medical supplies every month as some people do on a family’s monthly grocery bill. Don’t blame people for their “choices” based on your experiences or core values…..they aren’t the same for everyone!
August 29, 2012 at 10:47 am
Wow, Connie – you managed to be judgmental and naive in the same post.
I’m happy for you that you did/do not have to work while your children were/are young. My good friend, a single mother, could not afford to feed her kid without working, which means ’shoving’ her kid in day care.
Her inability to say ‘no’ to her impulse to provide shelter for her child (she has no addictions) and her stupid and selfish desires to eat and feed her child sure prove what a terrible mother she is.
She should really grow up and let someone else go to work so they can pay her rent, buy her groceries . . . Oh wait, . . . that would be the opposite of growing up and taking responsibility for herself and her child.
August 29, 2012 at 12:06 pm
@Connie-it seems sad to me that these discussions have to devolve into judgment and criticism. I was nodding with agreement until the “shoved into daycare” line. Then I started shaking my head, once again feeling like the so-called “mommy wars” were rearing their ugly head. I certainly don’t think it’s my addictions and impulses that brought me to enroll my son in daycare, unless you consider shelter and food addictions and impulses. Up until this point, this post had brought much productive conversation and ideas for new parents. I hope any further posts continue on that line, rather than that of negativity.
August 29, 2012 at 12:16 pm
Discussions about children inevitably bring out people’s judgemental side. Good parents do their best, and great parents support other parents to do the same. Gail, you’ve got some sound advice, and you sound like a great parent. Thanks for this article.
Somewhat tangentially: I am wholly unimpressed with the culture of total parenthood, which suggests that if we don’t fixate entirely on our kids to the complete detriment of ourselves and (for some) our careers outside of the home, we are somehow unfit parents. One thing I respect most about my parents is their independence and the interesting life they’ve always modeled. Provide for your kids, but have your own life, whether that includes working within or outside your home. Some parents truly love their jobs, and want to have that actively in their lives. And be nice to other parents, not all of whom came into parenting at the same time or in the same situation as yourself. Be compassionate, as I imagine you teach your kids to be. //end rant
August 30, 2012 at 8:54 am
@Connie – I would have rather stayed at home with my child then go back to work – but financially (especially if I want to fund a portion of his education and do more than just sit at home playing) I need to go back to work. Also, when you have spent almost $75,000 on a university education, you might want to use it for some time! My child is at a home daycare with a Mom of 3 who plays with him all day and gives him lots of attention – Remember, it takes a village to raise a child.
We are definitely at the budget end of things when it came to purchasing much of our baby stuff. The car seat, crib were bought new – almost everything else was used (some for free, some were bought of kijiji). I saw parents at a baby store who were looking at a $300 high chair for their baby. Thought that was a little steep. Some of the baby stuff is just so grossly over-priced. There are also somethings that you don’t need or don’t need so much of. For example you don’t need over 30 onesies for a newborn (they grow out of it so fast) nor do you need 50 washcloths (I was given over 50 – only used 10 and gave the rest away to a teen mom who needed help).
August 30, 2012 at 1:32 pm
I just found out we are expecting #2 and am terrified of what’s going to happen when it comes time for daycare! Perhaps, as @Connie suggests, I should be a good parent and give up my job, move my family under a trestle bridge and live on love. Alternately, I’m looking at 2K/month on childcare. Plus a mortgage, car payments, debt payments, insurance, groceries, etc, etc, etc. My husband’s income will cover childcare and possibly the insurance, while mine will have to stretch to do everything else.
RESPs are all well and good, but at the end of the year daycare costs much, much more. Where is our government savings program for that, because $100 per month feels like pennies in a jar.
August 31, 2012 at 3:25 am
Katrina – 1ST – CONGRATS ON YOUR PREGNANCY! :O
I believe the gov does have subsidized day care, you should ck into it in your area to see what may be available to you.
RE: The $100/mth feeling like pennies in a jar, pls read Robyn’s, Amiee’s and my post above – it really adds up, esp. for RESPs.