Two Money Conversations to Have Before Your Baby Arrives

You’re pregnant and suddenly, everyone has a plan for you. Your mom keeps talking about a baby shower, people at work share ideas for the nursery, and your partner searches for educational videos about safe sleep practices at 2am. Amidst all this joy, there’s something you should never ignore discussing with your partner: your finances. Unfortunately, the topic of money is often left unresolved until the baby is already born, and that’s the worst time to handle financial stress. Here are a couple of financial points every parent must discuss before welcoming their baby.

The Education and Long-Term Savings Conversation

Discussing your child’s education and academic future may seem like something that can wait, but it’s not. Yet, you’re still in your first trimester, but if you don’t discuss it now, you’ll regret it later. In fact, many parents leave it for “later”, only to find themselves playing catch-up when their kid is halfway through elementary school.

Being proactive in this regard is vital for a powerful reason: time and compound growth. During pregnancy, it’s easy for you to think about your family’s future because you don’t yet have your hands full trying to raise the baby. However, after the baby’s birth, your life will be consumed by feedings, changing sleeping cycles, and rushed schedules. It’s common for every parent. Therefore, you must discuss your options right when you’re sharing ideas for the baby’s room.

Discussing this matter early means parents can use many savings plans that offer compounded growth if set up early. For instance, Canadian parents can go for an RESP (Registered Educational Savings Plan) before or immediately after the birth of their child. This savings plan allows contributors to save money in an account that actually grows, with government grants added on top. If parents don’t open this account early enough, the government grant for children will go unused. That’s why it’s vital to be proactive and use these options strategically.

The Income and Parental Leave Conversation

Many couples are often surprised by how parental leave impacts their finances, especially because they don’t take the time to discuss the financial implications early. After the child is born, they realize that they have to live off about 55% of their income, or that their income during the parental leave is just not what they anticipated. This may feel awkward because it relates to security and independence, but it shouldn’t be avoided. Here are some important points to discuss in your conversation:

• Employer parental leave policies (percentage, full salary, or unpaid)
• Government benefits available (child tax credits, parental leave insurance)
• Timeline for benefits reinstatement
• Actual take-home amount during leave
• Debt payoff fund requirements before leave
• Whole handles financial dependence emotionally
• Childcare costs vs. lost income calculations
• Work-related spending requirements during leave
• Decision-making authority when finances shift

End note

Talking about these topics won’t matter to your baby, but your relationship, stress, and lack of money can. Having open discussions about money management before the baby is born will reduce conflicts about the topic later. Be sure to grab your partner and discuss these points; your future selves (and your baby) will thank you.