Anticipating New Expenses

Anticipating New Expenses

When raising a family you're sure to encounter many new expenses that you may not have anticipated. From saving for your children's education to replacing clothes that they couldn't possibly have outgrown yet, planning your family finances can be full of surprises. With a little foresight you can make your job much easier.

Preparing a New Budget

Before you sit down to draft a new budget, you'll need to estimate your new expenses. Aside from the obvious costs of food and clothing, what else will your children need? From cribs, strollers and child safety-seats for your car, to home renovations for a nursery, you need to plan for the major expenses.

Aside from these types of one-time costs, there are a number of other regular expenses to consider. Most importantly, you should set aside money each month for medical and dental expenses. Even a few dollars a week can make a big difference if your child needs braces or eyewear when they get older.

You and your partner should also discuss your child's education. Will they need daycare or after-school care for a number of years? How much will that cost? You should also think about RESPs for post-secondary education as a way to help your child with the rising costs of tuition. How much you contribute is up to you, and will depend on what's right for your family, your budget and your long-term goals.

Implementing Your New Budget

Once you have figured out the costs involved in raising a family, you and your partner can carefully plan a new budget. Don't forget to take into account maternity or parental leave times that may affect your total annual income.

Your new budget will be quite different from your previous budget, and you may find it hard at first to make the required lifestyle adjustments. For example, you may have to cut your entertainment expenses from 6% to 2%. But don't worry, you'll get used to it once you realize that a picnic in the park and a ride on the swing can be a great replacement for a night on the town.