Kids and Costs

Q. I’m two months pregnant now. When will my baby move?
A. With any luck, right after he finishes college.

You can hope that is only a joke, but when you first have kids, is when you understand the least about the financial ramifications this might have on your life (both immediately and in the long term).

As my regular readers know I have been ranting about RESPs and the rules behind them, but when my kids were born, the RESP didn’t even exist. The way to save for your kids education was either buy into one of those bizarre savings programs where you sent them your Baby Bonus cheques, and if your kid went to school the firm paid for their education (but if they didn’t go, they kept your money). Luckily things have changed a little, but I am sure there are still folks out there using these kind of programs.

For folks who are having children now, I guess the advice I can think of (though not viewing it as the only advice or the best advice), would be to read and learn about some of the ideas for caring for your children financially.

1. Are you in debt? If you are, you need to have a plan to get out of debt in a timely fashion. If your child is just born, and you plan on buying a house and such, maybe a goal would be to have your house paid off before your kids get to University? It was a goal I had (that I did not succeed in accomplishing), but living Debt Free as soon as possible is a Primary Goal.
2. Don’t create debt, thinking you have plenty of time to pay it off before your kids start costing a lot more. I can assure you that when you are paying for diapers and formula you are wondering how you can afford that, but when you get to age 18 and have to pay for Tuition and such, you are in a whole different Universe when it comes to spending.
3. Get your kids a Social Insurance Number as soon as they are born, they will need it if you are going to create RESPs,RDSPs or other savings vehicles of the same type.
4. When people start asking,“What can you use for the baby”, don’t go frivolous, choose things that will lower your costs, or better still be absolutely mercenary and ask them to give you money. This does not work with close friends, but can work with family (although you will get a bad reputation in your family for being a money grubbing jerk).
5. Decide on which of the following models you want to follow:
   • Create savings vehicles for your kids futures, if you can. If you don’t have RRSPs, you aren’t likely to set up RESPs, but if you can figure out a plan on how to save money for your kids future.
   • Decide that the best thing you can do for your kids is teach them the value of a dollar, and how life really works, and don’t put any money aside for them. This plan has the assumption that you push your kids to start earning their own money as fast as they can, and that the kids manage this money carefully. There is nothing wrong with expecting your older kids to pull their own weight financially.
6. Remember that Kids and Money are two of the top stressers for any relationship, and since you can never control kids, you can try to at least have better control of your Finances.

Just some ideas that crossed my mind, given I am effectively dealing with both ends of this spectrum, with two kids in University, but another one in Kindergarten. I don’t think I have learned enough to say that with my youngest child, I am going to do better but I will try not to make the same mistakes I did with my older kids.

Any other advice for new parents out there?