Few things are more exciting than welcoming a new addition to your family. However, all that excitement comes at a price. Growing families often find it difficult to manage the costs a new baby brings – in both supplies and time – and generally benefit from utilizing the full value of available aid and resources. While it is often possible to lean on partners and family to address the time requirements, the financial part can be much harder to work around.
Comprehensive planning is the best way to address any potential financial challenge. But where does that start?
<h3 style="text-align:justify;">Group Benefits Maternity / Parental Top-Up</h3>Some group benefit plans include a maternity / parental leave top-up. These plans generally pay a portion of your income for a set number of weeks. If this benefit is available to you, it will generally pay more than you will receive through Employment Insurance. It may be worth your while to review your group benefits plan in detail or speak with your employer.
<h3 style="text-align:justify;">Employment Insurance Maternity and Parental Benefits</h3>Federal Employment Insurance (EI) benefit options are split between maternity benefits and parental benefits.
Maternity benefits are available for the person giving birth and pay up to 15 weeks at 55 percent of insurable earnings (up to $562 per week). Conversely, parental benefits generally follow the same structure and are available to either parent (including adoptive parents or parents of a child born through surrogacy). Families considering parental benefits have two options to choose from:
Standard: Up to 40 weeks (35 weeks if only one parent is claiming the benefit) at 55 percent of insurable earnings (up to $562 per week)
Extended: Up to 69 weeks (61 weeks if only one parent is claiming the benefit) at 33 percent of insurable earnings (up to $337 per week)
The Government of Canada’s website offers more detailed information about these benefit programs and how they could benefit your individual circumstance.
<h3 style="text-align:justify;">Consider Sharing Benefits with your Partner</h3>If your partner’s group benefits provide for a parental top-up, it may be worth considering splitting leave to maximize the benefits. In addition, an extra five to eight weeks leave may be available to your partner through parental EI benefits. This can increase the amount of time a parent is at home with your child and save money by delaying the start of childcare.
<h3 style="text-align:justify;">Child Tax Benefit</h3>Once your child has arrived don’t forget to apply for your Child Tax Benefit, which is calculated based on the following criteria:
- Number of children who live with you
- Ages of your children
- Adjusted family net income
- Eligibility for the child disability benefit
Your benefit adjusts every July based on income reported on your and (if applicable) your spouse’s filed tax return(s). The Government of Canada has a helpful calculator on its website to assist with estimating your benefit entitlement.
<h3 style="text-align:justify;">Looking Forward So You Can Look Forward</h3>There’s a lot to consider when planning for a baby. Ideally, you will have had adequate time to get some savings in place to help cover the initial costs, as well as any decrease in income if you plan on taking a leave from work. With some careful planning and sound advice, it is very possible to enjoy your maternity time creating cherished memories with your new family member instead of worrying about how you’re going to afford it.
If you find yourself struggling to maintain your existing budget and worry a new child will add more financial pressure than you can manage, you may want to seek the advice of a professional. You can find a Licensed Insolvency Trustee near you by visiting CAIRP’s website.