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4 tips to get your finances in shape for a baby.

Planning on growing your family? When it comes to kids, you’ll soon learn that everyone has an opinion, especially on the topics of food and screen time (we’re not going there).

But most can agree that kids are expensive.

In a recent Capital One Canada study1 , 57% of parents surveyed said the amount they spend on their children per year stresses them out. Food is their largest expense, costing an average of $2,841 per child per year, followed by school, daycare and extracurriculars, which average $2,170 per year.

And according to ballpark estimates published in 2022, it costs about $15,560 to raise a child each year.

With the current cost of living (who hasn’t taken a hit from inflated grocery bills?), these numbers may not be that surprising to you. But there are ways you can save as you make preparations for your growing family.

1. Don’t shop for baby items just yet!

The impending arrival of a new family member might have you sprinting to the baby section of your nearest department store. But your baby might not need as much as you think. Before investing in the latest gadgets that promise to make taking care of a baby feel like you’re running through a flower field, consider the following:

  • Enlist a shopping buddy who might have some recollection of the early baby stages (those sleepless nights are rough). They can help you create a baby registry of items you may need, and stop you from adding items you don’t. Are shoes really necessary for newborns?

  • Share your registry with friends and family so they know what to purchase for you. Several people can pitch in for big-ticket items like your stroller or bouncer.

  • Scout for deals! Of the parents surveyed, 78% said they wait for sales as a way to save money, and about half buy second-hand. You can sign up for email notifications from your favourite stores, or add a browser plugin that scans the internet for the latest deals on specific items automatically. And be sure to join local buy-and-sell groups. Babies outgrow clothing and gear pretty quickly, so you’re sure to find gently used and new items.

Tip: Add gift cards to your registry so that you can pick up items later on that weren’t gifted to you or supplies you may need in a pinch.

2. Adjust your spending as early as you can.

Don’t be fooled by their size! Babies have this remarkable ability to reeeeeally stretch your finances. Which is why we recommend creating a detailed budget. Here’s what you should take into account when building or tweaking your budget for a baby:

  • Factor in the essentials.
    Ensure monthly spending categories can cover recurring expenses like diapers and wipes. If you already have a budget, you may need to move some of your fun money to account for these additional costs. Living on a single income? We have a few ideas to help you uncover some extra cash.

  • Build an emergency fund.
    When your baby arrives, you may have less money coming in if you’re taking time off work, prompting hard choices about your lifestyle. An emergency fund can help ease that transition.

    If possible, set money aside to cover short-term expenses, like your hospital delivery kit (you can do a quick web search for ideas!), as well as urgent and long-term expenses.

    By making regular contributions, you can set yourself up to better handle expenses that arise after the first year. Many parents find themselves shocked by the cost of stuff like sports and tutoring.

    Not to mention the prices of “why not?” items, like toys and family excursions. Of the parents who responded to our survey, 74% said they had to pass on a nice-to-have purchase for their child due to their finances. In fact, 16% say they have to pass all the time.

    Costs add up fast, so it’s important to start thinking about your emergency savings account early on.

  • Picture your “soon-to-be” financial situation.
    Now’s the time to familiarize yourself with the benefits available through the government and your employer, if applicable.

    Whether you’re pregnant or you need to care for a child, you could receive a portion of your earnings while you’re away from work through the federal government’s Employment Insurance maternity and parental benefits.

    If you’re living in Quebec, you may be eligible for compensation through the Quebec Parental Insurance plan. Your employer may also offer maternity and parental benefits. Some companies will “top up” your government employment insurance so that your income while on leave matches or comes close to the income you received while employed. And, in July 2023, the government increased the Canada Child Benefit – a tax-free monthly payment to help with the cost of raising children under 18 years of age – by 6.3%.

    Interested in learning about other family and caregiving government benefits? Visit the Government of Canada website or save this Benefits Finder to your browser’s bookmarks.

  • Get the most out of your budget with digital tools.
    Of the parents we surveyed, 95% say they use one or more tools to manage how they spend money on their children. And if we had to pick a tool, it would be our mobile app – a great way to stay on top of your spending with one hand.

Using our mobile app, Capital One customers can:

◦ Set up alerts that let you know when your statement is ready and a payment is due. Because, baby brain, right?

◦ Keep track of your spending with transaction details – like date, merchant and location – and use this information to update your budget as needed.


3. Plan for the future.

While there are countless things to think about in the short-term, making preparations for your child’s future now will set them up for success in the long-run. Your future self will thank you too.

  • Purchase life insurance.
    In the event of a tragedy, a life insurance policy can give your loved ones some additional financial support. There are two types of policies, term and permanent, and each offer unique benefits.

Term life insurance: Offers coverage for a fixed period of time, usually 10 to 20 years.

Permanent life insurance: Offers coverage throughout your lifetime and can also build up a cash value, allowing you to get money back if you cancel your policy. You may be able to take out a policy loan or use your life insurance policy as collateral for a loan.

Visit to learn more and find out which policy is right for you.

  • Set up a Registered Education Savings Plan (RESP).
    An RESP is an investment account that allows you to save for your child’s post-secondary education while enjoying tax-free growth and earnings. With an RESP, you can receive additional education grants through two government programs, the Canada Education Savings Grant and the Canada Learning Bond. Funds can be used for all kinds of expenses, like tuition, books and accommodations.

4. Think about your return-to-work plan.

Although you may be on leave for 12 or 18 months, you should start thinking about what your return-to-work plan could look like. Do you want to return to the same employer? Will you be relying on family members or private childcare providers? Childcare spaces are limited in many Canadian cities, and you may need to get yourself on several waitlists to ensure your child has a spot when you’re back to work.

Find out how to prepare for changes in the economy, or get ahead with money-saving tips for when your child goes to school!


1 Capital One Canada commissioned an online omnibus survey through Leger. Leger fielded an online survey of 1,500 adults across Canada in July 2023.