Julie is expecting a baby in a month. As a business owner, she needs to plan for expenses after the baby is born without receiving any EI benefits. On the other hand, Katie is a seasoned art director for a medical communications company but is also family oriented. She has 3 young children and lives in a beautiful home in downtown. How does she manage her family finance? Katie shares her family finances planning experience and knowledge with Julie to help her plan for current and future expenses.
Childcare fees are the biggest expense
Katie: When our first child was a year old, we were very lucky to be offered a spot at the daycare in the local French school. The school’s child care programs are a bit cheaper since they’re partially subsidized by the school board. Spots are very competitive and it’s a good idea to put your name on wait lists at several different centres to increase your chances of getting child care.
The cost is significantly higher to hire a nanny, but some families find the convenience and flexibility very helpful. For a short period of time, for our second child, we did a nanny share with another family, which helped defray the cost. As with any employee, there are the usual considerations with nannies, including sick days, vacation days and EI premiums.
– In Toronto, infant daycare (up to 18 months) costs an average $1676 per month
is the ability to buy, sell or rent a property for profit (Feb, 2015)
– The cost goes down for daycare as your child grows in age: Toddler: $1324 per month, Preschooler: $998 per month (Feb, 2015)
Look for extra income resources
Julie: How did you manage all of your finances in the last 5 years with 3 kids?
Katie: It’s an on-going struggle… I worked full-time between each of my maternity leaves, but even still our cash flow was drying up pretty quickly. To better prepare ourselves financially before our third child was born, we rented out the upper floors of our house for a few months. Since we live in downtown Toronto, where visitor traffic is relatively good year-round, we decided to use airbnb and the results were amazing: we earned 11K in 3 months! Financial planning definitely helped.
– Rent unused rooms or floors of your house to earn extra income
– Put some money towards house improvements and separations into duplex or triplexes to earn more money through rental income
– Real estate investments have an upward market trend, and may be another source of income to look into
Julie: I know some women tend to quit their jobs after having their second kid due to daycare costs, other expenses and issues in the workplace. I feel the career gap could cause some challenges, do you agree?
Katie: I agree. Even if it doesn’t get you much further ahead financially, I think there are many good reasons for going back to work when your kids are still small. I have several friends who were business owners and have gone back to work part-time just 1 or 2 months after giving birth. There are different reasons for this decision, including a desire to ‘stay in the game’, or the need to maintain a client base.
It’s also pretty common to hear about issues resulting from a long absence from a job. Many employers offer more support for working parents, such as flexible work hours and other accommodations, but it’s not always easy. The decision is a personal one for everyone and it depends on many variables, such as your financial planning goals.
– Although there are laws that provide some job protection for those on maternity or parental leave, returning to the workplace can be fraught; duties and responsibilities can change, and sometimes employees are even permanently replaced
– Family-friendly workplace policies may still be the exception rather than the rule, forcing primary care-givers to choose between their kids or their careers
Budgeting and Financial planning: I want Strawberries!
Julie: Do you have a specific budget to follow? I am 8 month pregnant and this year grocery prices have gone up like crazy. Although it’s pricey, I feel I should treat my baby and myself when I want those strawberries.
Katie: I have been feeling like that for the last 5 years. Yeah, I know having a budget would be good, but it’s not easy in practice. Financial planning at this point could be the greatest tool.
My advice is:
- Spend less on disposable things, and keep yourself healthy
- Minimize the amount you spend on new baby clothes and gear
- Buy used clothes and gear as much as possible
- Organize a list of items you really need so your friends and loved ones can help out
– Connect with other parents, get saving tips and learn of good bargains
– Reuse some items that you have and also be open to pass along items to avoid spending useless amounts of money on something you’ll use for only a few months
– You can always find great things on Once Upon a Child, Craigslist and Kijiji