Financial planning for marriage or children

Lewis notes that parents spend nine months researching strollers, setting up the nursery and reading parenting books, but “the longer-term financial realities are often pushed to the back burner because the immediate demands of a newborn take over.” Getting started before a child’s arrival makes the most sense.

Personally, I can relate to this. As a parent of twins, my family had a robust plan for my year of parental leave, but what was not in my family budget was the extent of daycare expenses (before $10 a day daycare), as well as the costs associated with daycare-related illnesses and babysitters when the children were too unwell to go to daycare. During one flu season, there was a month in which my children were both at daycare for only six days. Even with some family support, we ended up with weeks of babysitting fees we needed to finance separately from our regular budget for daycare expenses. If we had a better thought-out financial strategy before my children were born, this would have been a lot easier to manage.

Creating a personal finance strategy

A recent RBC poll reveals that only “48 per cent of millennials have a financial plan, and of those, one-third described their plan as being in their head, rather than more formally created.” The poll also showed that only 22 per cent of those surveyed have worked with financial professionals or sought professional financial advice in the past year. The reasoning for not obtaining advice included: lack of knowledge and fear of judgement, stress over their financial situation, not knowing where to start and the belief that financial advisors are just for the wealthy.

Practical advice from Lewis counters this: “Never let the inability to save a ‘perfect’ amount stop you from starting with $25 or $50 a month.” He also recommends automation to remove the daily friction of deciding whether to save during stressful times, noting that steady contributions during stable times create the exact buffer needed to absorb life’s curveballs.

Avoiding common pitfalls

Beyond waiting for the “perfect” time to contribute to a savings plan (which means missing out on allowing time and compound interest to do the heavy lifting of building savings), Lewis notes another common pitfall: leaving money on the table with government matching programs. For example, he says: “In Canada, the government matches 20 per cent of your annual contributions into an Registered Education Savings Plan (RESP) up to $500 per year through the Canada Education Savings Grant, so parents should open an RESP account early to maximize these incentives.”

Many financial institutions have financial planning checklists for life events to take the guesswork out of planning. For example, iA Financial Group offers a broader scope plan, and Edward Jones has created a more specific checklist like this one for preparing for a job change.

Note: These are examples of financial planning checklists, not recommendations for financial planning services.

Conclusion

While it may seem overwhelming, taking small steps and scheduling time to learn about and build a personal financial strategy are fundamental to your future success and better managing life’s road bumps. Book some time in your calendar and get started!