As a new grandparent, I began to build a list of the new financial things my son and his partner should consider now that their baby has arrived. So, I figured it would be helpful to share this checklist with you as well. Ideally, you should consider and action some of the things listed here in the first few months of pregnancy.
What
kind of leave can we take and for how long?
Mothers get
at least 15 weeks of maternity leave, some of which can be taken before the
baby is due. This varies slightly from
province to province. In Alberta, for
example, maternity leave lasts up to 16 weeks and can start as early as 13
weeks before the mother’s estimated due date.
After the maternity
leave period, parents are also able to take up to 62 weeks of parental leave.
Parental leave is flexible and can be taken by the birth mother (after the maternity
leave period), the other parent, or shared between both parents. Parental leave can be taken any time after
the birth of your child, but it must be completed within 78 weeks of that date.
What
does the Canadian Government financially provide for leave?
The basic
rate for maternity or parental benefits is 55% of average insurable weekly
earnings, up to a maximum amount. In 2025, the maximum amount is $695 a week.
Canada’s Employment
Insurance (EI) maternity benefits are paid for a maximum of 15 weeks, at which
point parental EI benefits start for up to an additional 35 weeks. Remember, parental leave, and thus the EI
benefit can be taken by either parent or shared between the parents. For example, mom could take her 15 weeks of
maternity leave, then take 20 weeks of parental leave and get EI the whole
time. Then the other parent could take
15 weeks of paternity leave and get the remaining EI during those 15 weeks.
Hang on,
wait a second. I thought you said that maternity leave can last 15/16 weeks and
paternity leave can last up to 62 weeks, not 35. So, yes, this is true, but from an EI
perspective, all that happens is that the same payments are spread out over a
longer period. To be exact, the extended
parental benefits has a rate of 33% of average insurable weekly earnings, up to
a maximum amount. In 2025, the maximum amount is $417 a week.
What
about my employer?
First, from
a leave perspective your employer is required to provide the leave period
specified above. What they may also do
is provide a leave salary “top up” by adding to the EI payments you are
receiving. The key word here is “may” as
they are not required to do so (an Aon survey from 2021 noted that 58% of
employers surveyed provide a top up benefit).
This top up could be for any period (with 12-16 weeks being somewhat
common) or longer. It could also be some
percentage of your salary (either 75% of salary or 100% of salary are common).
So, what
should you do?
For sure
the decision on how much maternity and paternity leave you will take and
whether your partner will take some leave too is a very personal one and there
are many non-financial reasons that may come into play. But unless you get a
100% employer top up for the entire duration of your leave (very unlikely) you
will be earning less money (maybe even far less) while on leave. So, be sure to look at the financial impact
of how long you take leave and who takes it – it’s usually best to figure this
out on a spreadsheet or pad of paper.
That is, consider:
- a) What would each parent’s EI benefits
be?
- b) Who makes more money?
- c) Do either of you get an employer top
up?
Let’s look
at an example. Betty and Joe are
expecting their first child in a couple of months. They both work with Betty earning $80,000 per
year while Joe earns $60,000 per year.
Betty is self-employed and so she does not get any top up. Joe, however, does get a top up for paternity
leave of 100% of his salary for up to six months. The couple has planned for a family and
taking the full 18 months off is very important to them but they weren’t sure
how much time Betty should take off – 3, 6, 12, or 18 months?
Betty is
conflicted too – she wants to stay home with her child and she is excited about
that, but she is self-employed and she worries about losing clients if she
takes to much time away. Finally, they
know that taking 18 months off is going to hit their finances and they worry
about that.
Sitting down with a spreadsheet it becomes obvious that from a pure financial standpoint, they would be in a better position with Betty taking off as little time as possible (Betty earns more money and Joe gets a top up). Betty’s not too happy about this and so they work the numbers a bit more. What about 6 months off for Betty and 12 months off for Joe? It’s not an absolute optimal strategy financially, but they calculate what they will earn together during this period and they figure they can make it work.
2. Apply for Canada Child Benefit (and other related benefits)
The Canada Child Benefit (CCB) is a non-taxable benefit paid monthly to families with children up to age 17. It is based on your family income, number of children, children’s ages, and your marital status. For the benefit year from July 2025 to June 2026, the maximum amounts are:
- Up to $7,787 per year (approximately $648.91 per month) for each child under 6 years old.
- Up to $6,570 per year (approximately $547.50 per month) for each child aged 6 to 17 years old.
Most
provinces and territories, including Alberta, British Columbia, Ontario, and
Québec, also provide programs and benefits to help families raise children. In
some provinces/territories, these benefits are handled separately from the CCB.
In others, they are administered by the CRA and paid together with the federal
CCB. For example, in Alberta, they have
the Alberta child and family benefit (ACFB) which is administered by the CRA
and is a tax-free amount paid quarterly to families that have children under 18
years of age. For July 2025 to June 2026, you may be entitled to receive the
following ACFB amounts:
- · $1,499 ($124.91 per month) for the
first child
- · $749 ($62.41 per month) for the
second child
- · $749 ($62.41 per month) for the
third child
- · $749 ($62.41 per month) for the
fourth child
How do
you apply for the CCB?
You can
apply three different ways. The first,
and easiest, is through your birth registration. This is done right at the hospital
when you register the birth of your child. You should ask about this and consent
to give your social insurance number to allow the Vital Statistics Agency in
your province to share the birth registration number with the CRA. In Alberta, this is known as the Automated
Benefits Application (ABA) service and the hospital will register you for both
the Canada Child Benefit and the Alberta child and family benefit.
The second
method is through the CRA “My Account” portal. Once you log in, find "Apply
for child benefits" and confirm your contact, marital status, citizenship,
child's name, gender, and date and place of birth. Review your application and
submit it. The CRA may also request additional documents. You can add those by going to "submit
documents" in the portal.
The third method
is mail applications. You can download and fill out form RC66 (Canada Child
Benefits Application), attach other required documents, and mail the completed
and signed form to a tax center.
A couple of
other tips:
- · Make sure you can access the CRA “My
Account” portal so you can track progress of the application and double check
the calculations. There are other handy
things in the portal too
- · Also in the portal, make sure you
are set up for direct deposit with CRA.
Who wants to get monthly cheques in the mail (especially if there is a
postal strike)!
If you
don’t already have one, set up an emergency fund of at least three (3) months
of living expenses and, ideally, up to six (6) months of living expenses.
An
emergency fund is a safety net designed to cover unexpected but important
expenses or to cover you in the case of loss of income between jobs.
You should
put your emergency fund either inside a Tax Free Savings Account (TFSA) , or a
regular high-interest savings account.
In either case, the money should be in a safe investment that you can
quickly access like high interest savings or money market exchange traded fund.
4. 4. Plan for Adequate Life Insurance and Long Term Disability Insurance
If you don’t
already have life insurance or long term disability insurance, this is an
important time to get it. You have a new kid that is totally dependent on you
for all their needs. This applies to both parents.
You must
ask yourself - If something were to happen to me or my partner would a single
parent be able to handle the financial costs of losing their partner’s income
(and either not being able to work because you must take care of your baby or
having additional daycare costs)?
If yes, you
need to have some life insurance and you should consider long term disability
insurance.
Life
Insurance – How Much?
Situations
are unique based on where you live, outstanding debts like mortgages and
more. There are online calculators that
can help you with this. A basic rule of
thumb is for each new parent to have life insurance that covers about 10 times
your salary plus your outstanding debts.
For example, Joe makes $60,000 per year and has $200,000 owing on his
mortgage. A decent amount of life
insurance coverage would be about $800,000.
Life
Insurance – What type should I get? And from where?
Forget the
fancy sales pitches, complex articles, and glossy white papers. The type of life
insurance you should get is simple term life insurance. Term life provides coverage for a specified
period and at a specified cost to you and pays a death benefit to beneficiaries
if the insured dies during that term. Term life insurance policies are typically
available for almost any period, though 10 and 20 year terms are the most
common. As a new parent, you probably want a term that covers your newborn to
adulthood so that would mean a 20 year term.
You may
even have some life insurance already.
Maybe your mortgage or line of credit is already ensured. You may have life insurance through your
workplace benefits (some multiplier of your salary, often one, two, or three
times your salary). If this is the case,
you can adjust your needs. Following on
the example above, if Joe has workplace insurance that covers twice his salary,
he can lower his additional life insurance needs accordingly.
You can get
life insurance almost anywhere. One of
the best places to start might be where you are already getting your home
and/or car insurance as they may bundle it in at a discount. Life insurance is not expensive and offers
good value for the peace of mind it can bring to your spouse and new child.
Long
Term Disability Insurance
Long-term
disability (LTD) insurance isn’t something you ever want to need, but if you
do, you’ll be thankful you have it. LTD
provides financial assistance if you are unable to work because of an accident,
injury or illness and LTD payments cover a long period of time.
Like life
insurance, many employers offer LTD as part of your benefits package often
covering some percentage of your earning (such as 67% or 75%) so be sure to
check your benefits first.
You can get
LTD through some major banks, insurance companies, or insurance brokers. It is typically more expensive than life
insurance but just as valuable.
RESPs are a
Canadian government program to encourage and help families to save for their
children’s post-secondary education. It
truly is the best place to start saving money for your child’s education.
Why? For starters, the money you put into an RESP
plan grows tax free. Plus, the government
matches your RESP contribution with a 20% bonus match (called the Canada
Education Savings Grant).
Some
specific rules around RESPs to note:
- a) In each calendar year the maximum
grant is $500 per child (more for low income) so you can put in $2500 per year
to get the maximum grant.
- b) The lifetime maximum of RESP contribution per child is $50,000 while the lifetime maximum grant amount is $7200 per child (which would mean putting in $2500 per year for 14 years plus part of another, $36,000).
- c) There are three types of plan: Individual (meant for exactly one child),
Family (can be shared amongst multiple children) and group (pooled
contributions whether other plan members, not recommended).
If you
don’t already have a will, you need to put one together – for each other (and
your assets) and for your newborn (i.e. if both parents pass away). Without a
will, a court will decide who cares for your child and how the estate is
handled and this may not align with your wishes. The will needs to include who will be your
executor (the person that will look after the administration of your will) and,
very importantly, assigning a guardian(s)
to look after your child in the event you both pass away.
A power of
attorney document ensures someone is designated to make financial and
healthcare decisions for you if necessary.
The good
news is that you can complete a basic will and power of attorney online for as
little as $350 per couple (i.e. you both get a will and personal directive. Epilogue and Willful are two online companies
that do this.
What
makes a good choice of guardian?
They should
share your values and parenting style plus other things that matter most to
you. What geographical location are they
in? You should also factor in the person
or people’s age, health, current family situation and financial stability as
those factors can affect their ability to provide sufficient care for the
child. Most importantly, choose someone
who you trust completely.
Apply for a
SIN card (need for RESPS too). This may occur right at the hospital but be
sure to double check this is happening.
Add your
child as a dependent on any of your workplace benefits plans.
Update the
beneficiary designations on any registered savings such as RRSP and TFSA
accounts.
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