As soon as she got pregnant just over two years ago, Sandra Hanna and her husband Jason started scrutinizing their spending, slashing extras such as lunches out and new clothes, and began socking money away to cover the looming expenses of a maternity leave and daycare. “We had a moment of panic where we wondered if we could afford to have a child—we had just bought a house and we were used to having money to go out and enjoy life,” says Sandra.
That kind of panic is understandable. After all, it costs $5,000 to prepare for the arrival of a baby, according to a 2013 report by Scotiabank. And that’s small change compared to the total cost of raising a child to age 18, which is a whopping $243,660, according to a 2011 analysis by MoneySense magazine. Sandra, one of the five founders of Smart Cookies, an online business that offers its 50,000 subscribers advice for living debt-free, says she sought in vain for a good resource for new parents on how to create a realistic spending plan. Now she’s writing one. It’s called The Lift: An uplifting money manual for new and expecting parents and will be launched on the SmartCookies.com in 2014. She says one of her strategies for saving on baby gear was creating a list of all the experiences she and her partner were looking forward to when their son Jack, now 18 months, was born – things like having him meet his great grandparents. “We got excited about the experiences we’d share instead of the stuff we might buy. That helped keep us focused.” Sheila Walkington, a certified financial planner and co-founder of Vancouver-based Money Coaches Canada, says many new parents get into financial difficulty right at the start because of the income they lose during parental leave. “If you work full time, you’ll get 12 months off but you’ll have to live on about half your regular salary – lots of families go into debt that first year.”
Sheila and Sandra offer these tips for budgeting for baby: